Good morning, everyone, and welcome to this recorded management discussion of Thryv's third quarter results. By now, you should have received a copy of the company's third quarter 2020 earnings release and investor supplement which is also posted on our website at investor.thryv.com. With me today are Joe Walsh, our Chief Executive Officer and President; Paul Rouse, the Chief Financial Officer and Treasurer; and Ryan Cantor, Vice President of Product and Marketing. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Thryv has no obligation to update the information presented on the call. Also, on today's call, our presenters 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 the Investor Relations website at investor.thryv.com. With that introduction, I would like to turn the call over to Joe Walsh.

Thank you, KJ. During today's call, Paul and I will provide details on our Q3 results as well as guidance for Q4 and the full year 2020. We'll also spend time covering our business and market opportunities as many of you may be new to the Thryv story. For those who are new, let me take a moment and tell you about what we do here and offer some comments about the direct listing we just completed. Thryv, in the materials we set out, Slide #10 is a great visual that shows kind of the Thryv product overview. Thryv is an end-to-end client experience. It's basically an operating platform for a small business. We're on the device they already own, through the cloud, we deliver this great organizing tool. And it allows a small business to stay organized, to be visible everywhere across the web to get the job, to manage the job, and to get credit for the job. If you take a look at that visual, you can see some of the different pieces that are involved in Thryv and allow Thryv to operate. It really lets you do almost everything you need to do to run your business. And the things that it doesn't do, we have an app store or an app marketplace that you can go to. And let's say you want to have e-commerce capabilities, and you want to sell things on your website, you can just plug-in Shopify and use it, no problem. Zoom is right there in the app store. If for your accounting, you want to use QuickBooks in the cloud, you just plug it in and the API shares your sales information, so it updates everything. What's great about it is it's one login, so all your employees can use it, and you're able to keep everybody synced up with the other applications that you use. It’s an amazing tool for labor saving and getting organized. I've had a lot of customers tell me it's like having an extra employee or two, it does so much work. When you think about trying to get your listings right all over the web because you're changing your service, you're adapting right now to COVID, it's amazing what it's able to do just in terms of adapting your small business to the marketplace, allowing you to keep everybody up-to-date on your hours and your service offerings and so forth. It's a pretty powerful software tool. We're going to talk some more in a little while about how it helps you get paid. I'll come back to that later on. But ratings and reviews are really important online. Every time you do business with somebody, it thanks them afterwards and asks for a rating and review and helps post that in all the right places. Social media. It's got basically a dashboard where you can manage it or, as a service at Thryv, we'll actually do your social media posting. So pretty complete front end in your pocket all the time on the device you already own. We are the category leader in this thing. We basically invented this category that we serve. It's an enormous category. It's early. It's growing very, very quickly now. But it's a pretty exciting time to be doing what we're doing right now with Thryv. There's a visual that I think we have in the deck that shows cloud adoption, yes, it's Slide 11. In 2018, the cloud adoption index had only about 30% of small businesses using any kind of cloud-based software tool. That's risen already this year to 37%, and it's forecast over the next 2 years to reach 60% of small businesses. So we're still really in kind of the second inning of small businesses adopting cloud-based tools. One of the really interesting things is it doesn't just come out of like a marketing budget. This really comes out of an operating budget. It's really labor saving. So it really taps into a pretty large financing source there in a big market. Let's talk a little bit about how we go to market. We started from a standing start 5 years ago and grew in about the first 3.5 years to $100 million in revenue and 40,000 subscribers. That's going to be a record, I think, for how fast one of these SaaS software businesses can grow. You might wonder how we did that. Well, we did it because we had a very big Yellow Pages customer base and a 2,000-person sales force. That sales force basically ran out and talked to the small business customers, the Yellow Pages customers, told about what we were doing, and 40,000 of them signed up post-taste. What we learned, as we moved along, is that a lot of those small businesses weren't necessarily going to be persistent users of this tool. They were too small. They were one-man businesses, Chuck in a truck, Dan in a van. It’s really small businesses. They didn't really have any other employees to communicate with or even that many customers to communicate with. Some of those customers ended up churning out, not being the right fit. So we developed an ideal client profile that allowed us to target a little bit larger companies with a bigger need for the software and allowed us to move a little bit upmarket in terms of the average selling price. It's remarkable when you think about Thryv's development that we currently sell it through about 1,000 salespeople that sell the marketing services products. That sales force has shrunk as the marketing services business has shrunk. We variabilized the cost base. And yet, we still managed to have very strong SaaS growth. Now we've built new channels. We've got an inbound channel where customers come to us. We’ve got a partner channel that we’re beginning to build. We've got a multi-location channel. These are all lighting up now as well as international. We’re beginning to move international as well. So the growth fuse is definitely relit by all those new channels. You’re talking about small businesses at the moment all across the U.S. There are reportedly somewhere around 30 million small businesses in the country. We feel like this kind of 2 to 20 employee is like this perfect sweet spot for us to target. There’s a visual on Slide 13 to take a look at. We try to avoid just the one-employee businesses. Obviously, a giant enterprise is not a fit for us, but really up to 50 employees, the Thryv tool is a really strong fit for a very powerful connection. It's a big addressable market, about to get bigger as we move out internationally. I spend time talking with our customers. Back when I could go in the field, I went in the field and called on them in person. I do a lot of Zoom conversations with them now, trying to talk to a couple really every week or every other week anyway, just about what they're using, how they're using it, what they’re doing. You couldn't pry Thryv away from them. It’s basically how they do business. It's how they get their appointments, that's how they confirm their appointments so they don't have no shows, it's how they get paid,it's how they do estimates, invoices, billing, follow-up. They live in their Thryv. It updates their cloud payroll tool, their cloud bookkeeping tool. It really becomes like a right hand that they run their business on, so pretty powerful. I'm asked a lot about our direct listing. I guess we were the fifth direct listing to come through. I wanted to explain why we did the direct listing. We didn't need to raise any money. We have a captive VC in our Marketing Services business that throws off a tremendous amount of cash that we are using to fund the growth of the SaaS business. Our SaaS business, really, we've never raised any outside capital. The small amount of money that we used to get Thryv started, we've already repaid with profits generated from Thryv. We haven't been just throwing money at growth; we've been very careful about the growth rate. So we really didn't need to raise any money with the direct listing. It's a pretty exciting time for our company; you'll hear some more about some of the announcements that are coming through right now. This particular approach to getting public was not much of a distraction for management. We didn't have any big roadshows to do; there weren't a lot of fees that we had to pay. We did not have to offer a giant discount to all the brokerage friends. We just quietly relisted the company. We feel like that over the next period of time, there will be the price discovery that normally occurs in the run-up to IPO will happen for us afterwards. We're patient about that. We're not in any big rush. We’ve got some supporting shareholders that have been with us for a while that are excited about the company and its future. They’re supportive and willing to work with us and stay with us. So the direct listing worked out well for us. I'd like to just talk for a minute about our new Board. As a part of this transition, where we are putting SaaS-first and an emphasis on SaaS, we reloaded 5 of our 8 Board positions and brought in real domain expertise, people who've got a lot of SaaS software experience, who've walked this path. They've been a terrific resource, and there’s been a knowledge transfer going on from the very beginning; not just in the formal Board meetings, but they’ve been meeting with teams in different areas of specialty or expertise that they have, sharing ideas, best practices, and making introductions. It has been a boost to our kind of SaaS IQ bringing in this new Board. It's been excellent. I'd like to quickly comment on the pandemic. It has obviously affected small businesses all around the world. For us, we have not had much revenue concentration in travel, entertainment, or dining. These are not big areas for us. We tend to focus more on service areas: home services, personal services, auto services, health services, and legal services. These tend to be our world. So while we certainly have felt the pandemic, there have been effects of it, for sure; it has by no means been a direct hit for us. As you can see in our numbers, we’ve come through kind of like flying colors here. It’s gone well for us. We have given pandemic adjustments and credits to customers who were asked to close their businesses down for periods of time and so on, so you’ll see it in the numbers. But overall, we're delivering on plan and cash and EBITDA and having really a good year. The pandemic has been a tailwind for our SaaS business; a lot of small businesses that knew they needed to modernize had it on their list of things to do, have moved it way up the list now, and it’s a priority to get their website sorted out, to be able to communicate with their customers, changes in their service offerings, their safety protocols, to be able to get paid electronically and not handle cash or a physical check. The pandemic has structurally accelerated the migration where, to be competitive as a small business, you need to have this kind of end-to-end client experience platform that Thryv represents. Just I’d like to talk about our ThryvPay. ThryvPay is our proprietary payment application, where we work mostly with service businesses. Think about the tree guy, the plumber, the locksmith, the HVAC guy, the landscaping company. It's not like using Square is perfect for them; when you're coming in, you're buying newspaper and a pack of gum and you’re swiping your card, and it’s a $7 transaction. There’s a little tiny fee. These guys are often taking payments for $2,000 or $3,000 when they're not getting a payment. Many of the payment solutions are, frankly, charged too much and are just too cumbersome. They don’t want to be forced into kind of a credit card world. The ThryvPay offering is designed specifically for the service-based small business. It's got really attractive rates for scheduled payments like memberships or recurring fees or the guy who mows your lawn a couple of times a month and charges you a recurring payment every month or even installment payments. We’ve got a large service team behind it, we handle dispute assistance. Things like card on file, where every time you come in for your yoga session, it just charges the card, so you don't have to deal with the hassle of paying each time. It’s a flexible solution that we developed specifically for our customers. Sign-ups are coming in quickly; we just launched it about 1.5 weeks ago, and it's moving fast. People are signing up, we’re seeing payments coming over the platform, and we think this will be a big part of our growth and development. If you look at Slide 8, you can see how we think about the marketplace; ThryvPay is essentially like a freemium offering. It’s something that even someone who hasn’t bought Thryv can come in on ThryvPay. There’s a $15 million business addressable market, a vast market, and we make a little something on each transaction. It's a standalone service that introduces them to Thryv as a brand and software service. We think there's a chance to grow our Thryv customer base. Continuing with that slide, at the bottom, you see Hub by Thryv. That’s the parent-child relationship we have with a platform that lets you manage many Thryvs for multi-location businesses or for regional or national franchises. You use Thryv to operate each of those local businesses, keep track of their revenues, and you can use this hub as a master control panel to keep an eye on and run the whole thing. That’s a quick sense of what we're doing with Thryv and ThryvPay. I want to say that we call the company Thryv. The emphasis and focus are to grow the SaaS business. Our marketing services business is amazing. It’s been around for a long time. It’s cash generative, predictable, with a lot of forward visibility, and it provides reliable cash flow that we’re using to fund and drive the growth of our Thryv SaaS business. It’s really a perfect marriage. We have had a great year so far, and as we look forward to next year, we see the SaaS business continuing to accelerate. So with that, I'm going to wrap up, and I'm going to turn the call over to Paul Rouse, who will take you through our financials. Paul?

Thank you, Joe. Before we begin, I'd like to point out that while we will be talking about revenue during this call, due to the global pandemic, the company has temporarily issued certain customer credits in the second and third quarter, which have masked true year-over-year comparability in both SaaS and marketing services. During the third quarter, the company recognized pandemic credits of $7.8 million provided to customers most impacted by COVID-19. The company has reflected these goodwill adjustments as a reduction to revenue. Now I'll start with our SaaS segment. Third quarter SaaS revenue increased 2% year-over-year. When adjusted for temporary pandemic credits, SaaS revenue would have increased by mid-single digits. Our latest SaaS offering has experienced strong demand in 2020. The demand for cloud-based tools has shifted during the pandemic, and we are experiencing tailwinds in this segment. We've refined our ideal client profile to focus on larger small businesses, which has resulted in lower churn and higher average selling price. All this is proof that SMBs now require SaaS management tools more than ever, and Thryv's end-to-end client experience platform is serving those needs. Moving over to Marketing Services, third quarter revenue decreased 28% year-over-year. As we have said, Marketing Services is a naturally declining business. We must thoughtfully manage this business to a higher margin while we cross-sell marketing services, print, and digital clients into our SaaS platform and generate cash to support our growing SaaS business. Before we continue, I’d like to remind everyone that our print product has a contract price that usually exceeds 1 year. We target 15-month publications. These longer publication lives provide the twin benefit of eco-friendliness and margin lift due to decreased costs. A byproduct of a 15-month cycle is the year-over-year comparability impacted due to unevenness and timing of when the same directory publication revenue is recognized within a given year. Given this complexity, we will now provide billing data on a quarterly basis. This is provided in the slide deck available on our website. You'll see on Slide 6 that the unevenness of revenue recognition does not show up in our billings. In fact, this graph will show that our billings are actually quite steady. Turning now to profitability. Total company adjusted EBITDA for the third quarter came in at $69.3 million, resulting in an adjusted EBITDA margin of 28.8%. This decline in our second quarter margin is consistent with expectation, given the method of revenue recognition previously mentioned as fewer directories were published. Free cash flow for the third quarter was $73 million. So far, year-to-date, we have generated $158 million in free cash flow, which is in line with our expectations set at the beginning of the year despite the pandemic. Leverage based on net debt-to-EBITDA finished at 1.4x at the end of the third quarter, which is now the fourth consecutive quarter net leverage was under 1.5x, as defined by our credit agreement. We feel confident about our leverage profile, considering we had $30 million in share buybacks earlier this year. We’ve always focused on generating free cash flow to responsibly deliver value to our debt and equity holders. Over the last 5 years, we've repaid around $1 billion of debt and returned around $500 million to shareholders. Let's turn now to guidance. For the full year 2020, we expect SaaS revenue of $128 million, representing flat year-over-year growth when compared to full year 2019. It implies SaaS revenue of $33 million for the fourth quarter, representing an anticipated year-over-year increase in the low single digits. We believe SaaS will end 2020 with a solid run rate and momentum building into 2021. For the full year 2020, we expect Marketing Services revenue in the range of $955 million to $965 million. This implies Marketing Services revenue in the range of $190 million to $200 million for the fourth quarter. Again, period-over-period comparability of reported revenue is distorted by significant publication timing differences. The best way to think about the Marketing Services segment is a predictable, low 20% decline on an economic basis. For the full year of 2020, we expect adjusted EBITDA in the range of $358 million to $363 million, which calculates to a margin of 33% for the full year 2020, and implies fourth quarter adjusted EBITDA in the range of $58 million to $63 million. Now I'd like to turn the call back over to Joe.

Thanks, Paul. As you can see, we're on plan with the development of our SaaS business. I want to comment on how we got here. We went from a standing start to 40,000 subscribers in our SaaS business because we had a large sales force and a large customer base; we went out and offered to that customer base. More recently, we’ve begun to build new channels where every customer that came in was cross-sold out of our marketing services space. But as of today, more than half of all the customers coming over the transom for SaaS are new SaaS customers. They’re coming in through inbound marketing, partner channels, multi-location franchises. In some cases, they’re still coming from the traditional sales force, but they’re using software to open the account, and they may be cross-selling back to Marketing Services. More than half of all the new clients coming in today are new. It doesn't mean there's no penetration left in the Marketing Services base. That will continue, but we grabbed the low-hanging first 10% or 15% very quickly. Each time we make an acquisition, like when we bought YP, we saw more than 10% of their customer base come in right away. If you see us making future marketing services-type acquisitions, you can expect rapid penetration as we go out and offer Thryv. But importantly, Thryv has its own sales channels now that are beginning to develop. It works beautifully back and forth between marketing services, but it's beginning to stand on its own two feet with its own channels growing and developing. When we express confidence about building momentum with our SaaS business in '21, we have good forward visibility on the scaling going on with our inbound channel, our reseller channel, multi-location channel, and productivity rising out of the traditional channel, simply because the software is better and there’s positive word of mouth. Clients are engaged, and they refer their friends and it’s just much easier today than it was before. All the businesses function beautifully together. I want to wind up here, stating that the momentum we see carry through '21 will continue to accelerate. So with that, let me just open it up for questions, and we’ll be glad to answer what we can. Operator?

Your first question comes from Arjun Bhatia from William Blair.

First one, Joe, you talked about this a little in your prepared remarks, but I would love to dig into the macro environment a bit and the tailwind that it's generating. I know there's the macro, some challenges because of the economy, but there are also businesses digitizing for the first time. Could you share maybe a directional sense for how some of the gross customer add metrics are trending? Also, could you talk about the capacity you have internally to onboard new customers, ensuring they’re successful on Thryv? How are you handling those resource allocation decisions?

Thank you for the question, Arjun. You highlighted the answer in your inquiry. Small businesses currently feel a strong need to modernize and establish an online presence, update their websites, and inform customers about changes to their services and operating hours due to the ongoing shifts caused by COVID. Thryv effectively assists them with these needs. They can process payments electronically, follow up with clients, implement contactless solutions, and coordinate deliveries. For those who previously relied on in-store sales, they can now engage in e-commerce through our app store by integrating with Shopify. Overall, the demand from small businesses is significantly stronger. Previously, during the booming economy before COVID, some customers would express a need for change but lacked the time. Now, they have a bit more time and a pressing urge to take action. This situation is also mixed with uncertainty, as businesses remain cautious about the future and face reduced revenues. It's a blend of advantages and challenges. As we expand our new channels, we've noticed an upward trend in gross additions each month. We have a structured plan for growth, enhancing our inbound efforts, increasing the number of sales development representatives, and building those teams. Recently, our traditional sales team focused on selling Marketing Services has become more productive thanks to continuous improvements in our software. Regarding onboarding, our initial process was labor-intensive and supported by our marketing sales team. Now, we've developed a streamlined onboarding tool with our client experience group that offers ongoing support. We encourage customers to use multiple features, which increases their engagement. Once users utilize around four features, Thryv becomes essential for them. We have increased investments in product development and client services as we expand our customer base. We understand our leading position in the market and will keep innovating our product.

That was great color. I appreciate that. Also, I understand it’s early on ThryvPay, but it seems very exciting. I’d love to hear how you think that business might scale up and its contributions in the next year or few years. So far, have you noticed a particular type of customer adopting it? Where have you seen traction early on?

It's just a few weeks, I think 16 days since we launched ThryvPay, and we've had hundreds of sign-ups already. We're processing transactions quickly, so it's definitely kicking in and being used. We built it with service-based businesses in mind—roofers, plumbers, locksmiths, HVAC, and landscapers. These types of businesses usually receive large payments from their customers. Think of if you're doing a roof, you may pay $3,000 upfront and another $3,000 upon the job's completion. These businesses want electronic payments without the high fees associated with credit cards. ThryvPay allows them to provide that service, ensuring confirmation without the larger fee, which is appealing to them. We believe it will serve as a premium offering; even those who haven't bought Thryv can initially access ThryvPay. In earlier marketing efforts, we discovered a huge flow of small businesses looking for efficient payment processing—this is a significant area. We believe ThryvPay will function as a customer acquisition tool that can attract interest in Thryv. Next, our addressable market is substantial. The transactions undoubtedly provide immediate and convenient solutions for customers. We might see significant growth here, as we also generate revenue from each transaction, creating a fintech revenue flow for Thryv.

That sounds like a great opportunity. It was positively surprising to hear that half of your new customers are coming from newer channels. Can you share which of those channels—between inbound, partners, or multi-location—has the most potential for greater investment to generate more customer inflow to Thryv?

First, we admit we’re late to the dance. Most SaaS companies typically establish scalable inbound mechanisms early on. In our case, we faced the challenge of serving existing customers with a large sales force, focusing on that rather than building an inbound machine. It has taken time to develop a scalable machine. This year, we finally established it, dialing in the inputs through paid demand generation at the top, complemented by our content marketing, which was quite new. We’re getting better at it, leading to more free traffic and mentions. Inbound is now the focus of our plan. Turning to our partner or reseller channels, we’re making great strides this year, targeting the ideal partners. We’ve realized who our best partners are through trial and error. Multi-location and franchise channels are incredibly promising; we’ve seen a consultant refer to our hub as the 'Holy Grail', allowing franchises visibility into transactions across all locations—this visibility is crucial for ensuring compensations and overseeing business flows. We have already signed numerous franchise owners, some internationally, with hundreds in the pipeline. Our recent conference attracted more attendees than last year, with many being franchises. We’re building strong relationships and achieving favorable recognition in the market. We expect significant growth across all areas, moving into new international markets with the same channels we’re refining.

That’s very helpful. Can you discuss the guidance, especially for SaaS, regarding visibility into the fourth quarter numbers? What’s contracted, and how does your backlog look?

Like Joe explained, we're ramping up and building our channels. We're feeling good about the future. It's not quite like a backlog where there's backup stuff ready to come; it’s a consistent build. You're going to see a slow and steady increase with Thryv moving forward. In the charts, you’ll notice our Average Billing Owner (ABO) is increasing while our churn decreases, which is beneficial. Our sales force continues effectively selling the product.

Next question will come from John Slater from GPI Capital.

Joe, it’s exciting to see the focus on Thryv. You’ve created something meaningful for small businesses, and I see you're up to version 5.0 now. When I look at valuations, software companies usually trade at higher multiples. The combined company trades at a low 2.2x EBITDA. Thryv combines with a declining business, making it hard to gain the valuation it deserves. Why not consider spinning off Thryv to allow it to attain a higher valuation without the burden of the declining Marketing Services business?

John? I recognize your insightful question. The company is currently valued based on the cash it generates. It may seem grim, but we maintain patience, focused on building an excellent platform for small businesses; we believe in the long-term opportunity here. This will be the platform small businesses globally rely on. We think there’s a significant future for this business. The current valuation does not concern us because our focus is on building out our SaaS platform. There may come a time in four years when separating the businesses makes sense. Currently, both benefit from being together. We’re not overly concerned about crystallizing that potential value today; we’re committed to building. Some investment analysts see the underlying potential and describe our SaaS business as a ‘mini unicorn.' Our growth and engagement metrics are solid. Over the past quarters, we faced some challenges, but we have reformed our ideal client profile and are focusing on clients who utilize our software effectively. We will continue to grow engagement and payment volumes. In summary, you may be correct about the opportunity to separate these businesses and we are managing our resources as though we will split them in the near future. But we're also mindful of the potential upside that comes from keeping them together for now, so it will be a matter of time.

I agree with your perspective. However, won't the valuation remain low as long as Thryv is part of a business that's declining? Is it viable to maintain both entities together when the cost of capital disadvantage will hinder growth?

You raise a good point, and we'll take it into consideration. We’re running the business as if we’re preparing for a possible future separation and tracking our business segments separately. We also recognize the advantages of having both operations together. They mutually benefit from shared resources and expertise, and that may help to realize the growth trajectory we are on. We can stream new funding based on their collective performance. Although separating them has potential advantages, we will remain patient for now and continue to assess our strategies. Thank you for your insights.

Thank you, everyone, for joining today's conference. You may now disconnect.