Thryv Holdings, Inc.

ladies and gentlemen thank you for joining us and welcome to the thrive fourth quarter 2025 earnings call after today's prepared remarks we will host a question and answer session if you would like to ask a question please raise your hand if you have dialed into today's call please press star 9 to raise your hand and star 6 to unmute i will now hand the conference over to cameron lassard senior vice president corporate development and investor relations cameron please go ahead

Good morning, and thank you for joining us for Thrive Holdings' fourth quarter 2025 earnings conference call. With me today are Joe Walsh, Chairman and Chief Executive Officer, Sean Wechter, Chief Technology Officer, and Paul Rouse, Chief Financial Officer. During this call, we will make forward-looking statements that are subject to various risks and uncertainties. Actual results may differ materially from these statements. A discussion of these risks and uncertainties is included in our earnings release and SEC filings. Today's presentation will also include non-GAAP financial measures, which should be considered in addition to, but not as a substitute for, our GAAP results. Reconciliation of these measures can be found in our earnings release. With that, I'll turn the call over to Joe Walsh, Chairman and CEO. Joe?

Thank you, Cameron, and good morning, everyone. 2025 was a solid year, and our team accomplished a lot. SaaS revenues grew 34% year over year, and SaaS adjusted EBITDA margin was strong at 16.8%. We are accelerating on the AI front. It is advancing our product roadmap, and we are well positioned as a leading SaaS platform for small businesses. I want to spend my time today clearly framing the future of Thrive, and I want to be direct about what we're building because the results you see for the quarter and our guidance for the year only make sense when viewed through that strategic lens. Over the past several years, we've communicated our transition from legacy print and marketing services into a leading SaaS company. This has been a successful transition that's well underway. What we haven't shared yet is our next phase, not just evolving into a leading SaaS company, but becoming the platform of choice for small businesses who need to market, get found and chosen, who need to sell with automated follow-ups and capture every lead, and who need to grow by reaching more customers than ever before. Let me explain why this is important and what we've been building toward. Our marketing center is our fastest growing product, a differentiated and valuable offering in the market that's growing north of 50% year over year. In fact, in 2025, it more than doubled in revenue. If you look at our old paradigm of centers, it would be our largest center. But we recognized a gap. We were very good at helping businesses get found online and attract customers, but we needed to be equally strong at helping them convert those leads into sales, turn those customers into repeat buyers, and scale the entire cycle. Small businesses simply don't need more leads. They need to drive more revenue. That requires mastering the full journey. Get found, land the sale, deliver great service, earn repeat business, and do it again and again, a network effect with increasing efficiency. That's precisely why the Keep acquisition was so strategic for us. We acquired years of development time and product sophistication that would have been nearly impossible for us to replicate internally. The value isn't in Keap's revenue today, it's in the platform capabilities and the engineering talent integrated into our new platform that's let us accelerate our entire roadmap by multiple years. That's exactly what we've been engineering, combining marketing centers' proven ability to grow your business and get found online with Keap's powerful capability to move leads through the sales funnel and turn them into customers, all in one unified platform. No more separate products, no more fragmented experiences. Going forward, our entire strategy centers on one powerful offering, the Thrive platform. Powered by AI will be launching later in 2026. The Thrive platform represents a fundamental paradigm shift from selling individual products and centers to delivering a unified growth platform for small businesses. This is an architectural go-to-market and operating model transformation designed to help businesses market, sell, and grow within one integrated system. Historically, our software portfolio evolved as a collection of distinct solutions. That structure worked in the sales-led world. But small businesses don't think in terms of products. They think in terms of outcomes. How do I attract customers? How do I convert demand? How do I manage relationships? And how do I grow revenue with limited time and expertise? The Thrive platform is built to deliver those outcomes through a single experience with three tiers aligned to where a business is in its lifecycle, from a very small business just getting started to growing small businesses, and then eventually to establish businesses that want one platform to run their growth. A critical foundation of this platform is our CRM and automation layer. We invested here because the system of record is essential to building modern product-led experiences. CRM is no longer a standalone tool. It's the backbone, really, that facilitates onboarding, automation, AI-driven insights, and expansion across the customer lifecycle. At the same time, we're modernizing the platform around AI to reduce the effort required for customers to see value. AI is embedded directly into the customer journey to accelerate time to value, guide next best actions, and help small businesses grow without needing specialized marketing or technical expertise. This platform strategy also underpins a major evolution in how we go to market. We're moving deliberately toward product-led growth and a product-led sales hybrid model. Entry-level customers increasingly come in through self-service, product-led motions, while our sales organization focuses on higher value tiers, more complex needs, and expansion over time. There's one additional point I want to address directly as you think about our outlook. Over the past several years, our SaaS growth benefited materially from these initiated upgrades where we took marketing services clients and moved them from legacy platforms onto our modern SaaS platform. That motion was effective and helped us scale quickly, but it was always going to reach a conclusion. As we exited 2025, that upgrade pool is largely behind us. We have some remaining on our roadmap for the next few years, but they're smaller as a proportion of our overall revenue growth. And going forward, our growth will be fueled by three primary drivers, organic, customer acquisition, expansion, and retention. The Thrive platform is explicitly designed for this next phase. As a result, near-term growth rates will moderate, but the underlying quality of that growth improves meaningfully as we move out. So how to think about us going forward. Let me discuss how you should evaluate Thrive's performance, because I think there's an important distinction between signal and noise in our metrics. I want to make sure you're focused on what exactly matters on our long-term business value. Our business quality is fundamentally defined by customers spending $400 a month or more. We call these quality customers. Now, this isn't an arbitrary threshold we picked for convenience. This is where our unit economics work and where retention is materially stronger, where stronger expansion is attainable, and where we're building a compounding business model. Who are these customers? These are established small businesses, typically doing close to a million dollars or more in annual revenue, and they have four, five, six, even more employees. These aren't solopreneurs agonizing over a $50 expense. These are real businesses with real operational complexity. We're spending four, five, six, $700 a month on a platform that drives customer acquisition, manages their sales pipeline, and helps run their operations is frankly a straightforward return on investment decision. The data on this segment tells a really clear story. Retention rates are significantly higher than our blended average, and they're improving. They tend to expand over time, adding capabilities, increasing their monthly spend and deepening their investment in the platform. This segment is growing both in absolute customer numbers and as a percentage of our total base. These are businesses that integrate Thrive into their core operations and they see measurable returns. Together, we become true partners in their growth. This is where we win, and this is where we're deliberately concentrating our product development, sales resources, and our customer success efforts. Now, let me address what has created noise in the overall numbers. We carry a legacy tale of smaller customers, many spending well under $200 a month that came into our base through acquisitions, upgrades initiated by us or promotional offers that made sense at different points in our history but don't align with our current platform value proposition or our current pricing structure. These are fundamentally different businesses. These are micro businesses, solopreneurs, side hustles, operations where $100 or $150 a month is a meaningful recurring expense that they're constantly evaluating. We manage this segment in two ways. First, We actively upgrade these customers into higher value packages. We run targeted outreach, demonstrate additional capabilities. We show them the ROI of expanding their use of the platform and it works. Many do upgrade. They see value, scale their usage and transition into that $400 plus segment where the retention and expansion economics really kick in. And you can see evidence of this working in our ARPU trends. The second way we manage them is we accept the fact that these smaller customers do sometimes churn, and we're okay with that outcome. While it creates some pressure on our aggregate retention metrics, it does have minimal impact on our overall revenue. So here's the key distinction. If you evaluate us purely on total customer count or on blended retention metrics that treat all customers equally, you're essentially measuring the wrong thing. You're giving equal analytical weight to a $75 a month customer, a solopreneur who's extremely price sensitive and likely to churn software vendors regularly, and a $600 a month established business with a million dollars in revenue that views Thrive as mission critical infrastructure for their operation. Those are not the same business relationships. They don't have the same economics and they shouldn't carry the same weight in how you think about our business trajectory. So what should you be measuring? Growth in quality customers spending $400 a month or more is 18 plus percent in the fourth quarter of last year. We've had steady growth in that segment. Quality customers now account for 69% of our revenue in Q4 compared to 60% the prior year. Marketing center is our largest and fastest growing center within our market sell growth strategy. at two thirds of our SaaS revenue growing 34% in Q4. It's one of the clear signals of where this business is headed. Marketing center as a center is actually growing faster than the 34%. The 34% refers to the whole kind of platform of market cell growth. this matters enormously because marketing center represents an ai enabled platform and these are customers saying i want technology that helps me acquire customers manage my pipeline and grow my business and i'm willing to pay for it And here's what we're learning. Customers genuinely love software when it delivers results. Marketing center customers fit our ideal profile almost perfectly. They're spending meaningful amounts. They're seeing return on investment they can measure. They're expanding into additional capabilities as they see value and they're sticking with us because the platform becomes increasingly embedded in how they run their business. This is our business model. This is what Thrive looks like at scale. It's the right product for the right customer profile. And the performance validates everything we've been building toward. So when you're thinking about how to evaluate our performance and trajectory, don't just look at the blended customer counts or aggregate metrics. Look at the growth that we're seeing in our market sell growth strategy. Look at the $400 a month cohort expansion. Those are your forward looking indicators. That's where you can see proof that when we execute our strategy with our target customer base, we can drive strong, sustainable SaaS growth. Let me bring this together. Performance of MSG proves the model works. Now we're taking those learnings, combining them with Keap's customer conversion and lifecycle capabilities, and scaling that proven success across the unified Thrive platform. Judge us on the quality and trajectory of our customer base, not just the quantity. That's where the real value creation story is unfolding. With that context, let me introduce our Chief Technology Officer, Sean Wechter, who will talk about the progress we're making on the AI front. Sean has multiple tours of duty at market-leading public and private technology companies and joined our company about a half a year ago. I'll hand it over to Sean now to share a bit about what his team has been focused on. Sean?