Good morning. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Thryv Q4 and Full Year 2021 Earnings Conference Call. Thank you. Cameron Lazard, you may begin your conference.

Good morning and thank you for joining us for Thryv’s fourth quarter and full year 2021 financial results. With me on today’s call are Joe Walsh, Chairman and Chief Executive Officer and Paul Rouse, Chief Financial Officer. Before we begin, I would like to remind you that shortly before today’s call we issued a press release announcing our fourth quarter and full year 2021 financial results. We also published a Q4 earnings supplement on our website. I would like to remind listeners that 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 SEC. Thryv 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 these measures to GAAP will be posted on our Investor Relations website at investor.thryv.com. With that introduction, I would like to turn the call over to Joe Walsh. Joe?

Thank you, Cameron, and thank you all for joining us on the call today. I am pleased to report we finished the year on an exceptional note with revenue and EBITDA beating guidance. At the beginning of 2021, I outlined a growth strategy for our SaaS business and additional areas of investment needed to scale the organization. Looking back, I am really proud of the Thrive organization and the way we executed and implemented those investments into product, into engineering and improving the product, and the impact can be seen in the results. Let’s take a minute and just jump into the headlines. We grew total SaaS revenues for the fourth quarter by 36% and for the full year 32%. For context, we grew revenue in the SaaS segment 1% in 2020. So from 1%, we jumped to 36%. So, this is really strong performance. SaaS ending clients for the year, 46,000. So we ended the year with 46,000 SaaS customers, up 5%. There has been a lot of discussion about whether or not we can grow our subscribers because we made such huge progress on ARPU this last year. I think in the year ahead, you are really going to see a balance between ARPU growth and subscriber growth. The fact that we expect the kind of 5% subscriber growth will accelerate to double digits in the year ahead. In a minute here, Paul will walk you through the detailed numbers, but I would like to highlight some of the progress we’ve made on some of our strategic priorities. Since the beginning, I’ve been talking about this was the decade of SMB SaaS, but last decade was enterprises moving to the cloud. This decade would be the decade of mom-and-pop and small businesses running their business on mobile devices. By the end of this decade, that will be standard fare. At the beginning of the decade, for the most part, none of them were doing it. So, it will be a massive transition. That move will actually be bigger than when enterprises went to the cloud because there are so many more small businesses. We have positioned Thryv over the last seven years in pole position to lead that gigantic transition. So, this is an unstoppable mega trend that you are playing by investing in Thryv. Just from a macro basis, what we are seeing now is we are seeing small businesses that have been experimenting with perhaps a point solution or two or three become frustrated with logging in and out of all these things. The data doesn’t share, they don’t talk to each other, they got sticky notes everywhere. They have a hard time including their employees to use these tools. They are looking to move up-market to something more complete, to have an end-to-end client experience, an end-to-end solution. That’s where Thryv sits in that aspirational spot. People are trying out a few of these little point solutions, little freemium tools, and they realize that they want to modernize. They sort of find their way moving up-market into Thryv. Thryv is quite a bit more expensive than a lot of those little point solutions, but it does so much more. It’s a more powerful tool. I’ve been talking to customers just in the last couple of days. I have been doing calls into Australia speaking to customers in Melbourne and Sydney about their experience with Thryv. Yesterday, I spoke to a client who had been a pretty big MailChimp user. And she upgraded from MailChimp to Thryv and she has so much more capability to do social posting, set up automated messages to go out to her customers, to respond to her customers through the chat feature. She says she is really pleased with the power of Thryv, and she knows it does even more things that she hasn’t accessed yet, but she is excited about the completeness of the solution. She doesn’t need to keep buying other software. She had a rigorous look to figure out what to use and concluded to go with Thryv. I am hearing that story more and more in the weekly customer conversations that I have, people taking two or three point solutions and switching to Thryv. They end up saving money when they make the transition. They benefit from more power and more capability. Thryv is an aspirational brand. It’s not as expensive as an enterprise tool like Salesforce. It’s not even as expensive as a mid-enterprise tool like HubSpot; it’s more of a small business tool. But it’s a complete, powerful tool. It’s making a big difference for a lot of small businesses. By investing in us, you are participating in that macro trend that small businesses are going to want to run a more complete solution, where they can all communicate on that one tool. They can have a centralized inbox where all their messages flow in and it simplifies and organizes their lives. They can manage estimates, invoices, billing, payments. They can use ThryvPay, saving on transaction fees. They can manage social media, deal with ratings and reviews, nurture their customers, and keep in touch with them, reminding them to come back, all in one very simple tool. We have been recognized this year for a lot of innovation. The Google My Business helps SMBs get found online. We have a very deep integration there. Even though it’s software, it’s not advertising, because it’s SEO-friendly. It helps our customers get more leads, which is an unexpected benefit. We have launched verticalized platforms with enhanced CRM: ThryvHome, ThryvLegal, ThryvHealth. We are customizing products quickly to provide a bespoke experience for our clients. We launched free online tools to assist businesses with simple tasks like creating invoices, which has driven new customers to our website through content marketing. We focused on faster implementation and getting people to value quickly, which has shown results in higher engagement and lower churn. Our external recognition this year from review sites reflects the quality of the Thryv product. ThryvPay did north of $60 million in payment volume and has become the most popular choice of all the payment tools available. About 70% of our clients coming in now are new to the company. A third of our customers are coming from our new channels and inbound marketing. We are seeing subscriber growth accelerate as we outrun the lower-priced offerings we had in previous years. Our season churn is at 1.5%. Our net dollar retention is now 94%, strongly better than the prior year. We believe we can ultimately reach a 100% net dollar retention over time. Engagement metrics within the app, such as time in the app, user frequency, and clients using multiple features, are up. App downloads and installs have doubled. As for our Sensis acquisition, now called Thryv Australia, we focused in the first half on client engagement, ensuring customer satisfaction during onboarding. This foundation sets the stage for accelerated growth in 2022. Lastly, we made a small acquisition of Vivial Holdings, a marketing services company, which brings us 25,000 digital clients and expands our reach in markets we previously lacked density. We paid $21 million for this acquisition and are integrating it seamlessly into our operations, which will begin to positively impact our numbers this year. I am excited about our progress and am anxious to turn this over to Paul Rouse to provide a detailed financial overview. Paul?

Thank you, Joe. Let’s turn to our fourth quarter and full year 2021 financial results. I will first cover our U.S. business segment starting with SaaS. Fourth quarter U.S. SaaS revenue was $47.1 million, an increase of 35% year-over-year. For the full year, SaaS revenue was $170.5 million, an increase of 31% year-over-year and ahead of our guidance. When adding the contribution of revenue from Thryv International, SaaS revenue increased 36% year-over-year in the quarter and 32% year-over-year for the full year. Fourth quarter U.S. SaaS EBITDA loss was $6.7 million, within our expected guidance range. For the full year, U.S. SaaS EBITDA loss was $14 million, representing a negative EBITDA margin of 8%. Total SaaS ARPU was $351 for the fourth quarter, an increase of 20% year-over-year. Total SaaS clients ended at 46,000 for the fourth quarter, up 5% year-over-year. Fourth quarter seasoned SaaS churn was 1.5%, a 60 basis point improvement year-over-year and a 20 basis point improvement sequentially. Seasoned net dollar retention reached 94% for the quarter, a 400 basis point improvement year-over-year. Moving over to U.S. marketing services, fourth quarter revenue was $153.5 million. We expected lower revenues associated with fewer print publications. For the full year, U.S. marketing services revenue was $797.5 million, a decrease of 19% year-over-year and ahead of our guidance. Fourth quarter U.S. marketing services EBITDA margin was 26.5%. For the full year, U.S. marketing services EBITDA margin was 40%, representing a 330 basis point improvement when compared to our prior year. Fourth quarter U.S. marketing services billings were $181 million, a decrease of 22% year-over-year. Full year, U.S. marketing services billings were $797 million, a decrease of 21% year-over-year. Fourth quarter Thryv International revenue was AUD60 million and ahead of our guidance. On a reported basis, given the effect of FX rates, Thryv International revenue was $43.8 million. Fourth quarter adjusted gross margin was 66.1% for the consolidated business, a 160 basis point improvement year-over-year. For the full year, adjusted gross margin was 68.2%, a 130 basis point improvement year-over-year. Fourth quarter adjusted EBITDA was $46.5 million, representing an adjusted EBITDA margin of 19%. For the full year, adjusted EBITDA was $350.5 million, representing an adjusted EBITDA margin of 31%. Finally, on capital allocation, we repaid $17.5 million of our new term loan in the fourth quarter, bringing our cumulative new term loan repayment to $158 million. Our leverage ratio for the fourth quarter in accordance with our credit facility is 1.4x our net debt to EBITDA. We have made significant progress in reducing our pension liability over the course of 2021. We will continue to evaluate our net pension obligations each quarter.

Thank you, Paul. As you can see, we are really proud of 2021. We made many key investments that paid off beautifully during the year and that growth carries through to 2022. We will benefit significantly from the stance that our board has authorized to be more on a growth footing as we go into 2022. I think we can deliver durable, SaaS growth. The investments in engineering, product, international expansion, and go-to-market efforts are driving growth on more and more vectors. We are doing a good job of balancing the tension between delivering profitability and staying on top of this unstoppable trend that I have been describing today. We are very familiar with the Rule of 40. You will know that this business in the second quarter of 2020 was delivering positive EBITDA margins. It’s a relatively recent choice we made to step on the gas and accelerate that investment. So, our path back to profitability is crystal clear. We can ease up on how fast we are investing in international expansion and some of the engineering projects we are undertaking and return to profitability. Delivering 20% of the EBITDA line and 20% growth is not out of reach at all for us. We have chosen to stay on top of this because we see this unstoppable trend that we really feel we can ride. We have an Investor Day coming up in early April. Registration materials are on our website. This event will focus on the long term, looking at the decade of SMB SaaS, discussing how Thryv will lead small businesses in the U.S. and around the world on to the platform while adding interconnectivity with other tools and functions available. I want to emphasize that these two businesses, Thryv and marketing services belong together and they are benefiting mightily by being together.

Thank you. Your first question today comes from the line of Arjun Bhatia with William Blair. Your line is now open.

Perfect. Thank you for taking my questions. Joe, you mentioned and I saw the slide deck in the presentation about all the awards you received for your SaaS platform in 2021. There is G2, Capterra, many others. I am curious what role you are seeing that playing in building brand awareness for Thryv SaaS solutions? For the new customers that you are attracting to the platform, do you have a sense for how much of that is competitive consolidation, meaning they are using a SaaS solution already and they want a more full platform that they are getting with Thryv versus a greenfield opportunity where customers are adopting real software solutions for the first time?

Thanks, Arjun. It’s kind of a mix. Starting with the second part of your question, we are still bringing a lot of businesses into the cloud for the first time. Many of our service-based customers are skilled at their craft or industry, but may not have high educational attainment or were not thinking about modernizing. Our business advisors have been suggesting that they solve some of their problems using Thryv software for a couple of years, and they are moving over. A lot of times we are introducing people to what’s possible in the cloud. I would say that’s still the majority of customer acquisition. But increasingly, we are finding people who have started to use point solutions, particularly the ones that come through our websites. Winning these awards has translated into strong growth in organic traffic coming into our websites. That’s people hearing about us in the market, looking at the reviews, beginning to source something like this. It’s a nice benefit because we are not just spending to get them; they are coming to us organically. One other area I want to highlight is referrals from our existing customer base. It’s impressive how that keeps growing. Customers are referring friends. This word of mouth results in a third of our business coming from those referrals. To sum up, the awards reflect the reputation growing around Thryv and I think the awards are indeed helping us.

Awesome. That’s very helpful. Just one follow-up on the SaaS guidance; it seems like the numbers imply a pickup in net revenue added in the back half of the year. Are you seeing international in Australia and Vivial starting to layer in the back half of the year? Are there other drivers to consider for how the year unfolds?

Yes, you got it exactly right. Australia is really beginning to impact Thryv. We were careful to ensure high engagement and happy users in that market last year before accelerating growth. We are hunting at a large customer base there. The company we acquired, Sensis, was over 100 years old and a trusted brand in that market. We wanted to tread lightly to ensure everything worked well. So, yes, we anticipate acceleration through the year, and we are seeing positive trends. I was reviewing sales reports this morning, and yesterday was another really good day. As for Vivial, we just acquired that company, so the benefits will start to materialize more in the second half. Also, we have been building a multi-location franchise product; we are rolling out that functionality after being unable to attend franchise shows during the pandemic. With live shows returning, we have met a lot of people in the franchise business and are seeing great momentum there. The growth vectors you mentioned will continue to develop throughout the year.

Hi everyone, congrats on the good quarter. I guess two questions for me. Let’s start off with the year ahead here. You talked about your SaaS subscriber growth of 5% in the fourth quarter and your expectation for it to increase to double digits in calendar 2022. How much of that increase do you attribute to smaller SaaS customers churning and how much to your increased sales and marketing efforts driving net new customer growth?

I think there is some of each. Several years ago, we experimented with a stripped down version of Thryv at a lower price with self-sign-up. It brought us many customers, but also unengaged customers we didn’t want. We reached the conclusion that’s not where we wanted to be in the market. It was like selling an iPhone for $200; just not sustainable. This aspirational product is among the highest quality on the market. So, we stopped that version. The customer base bulge we accrued during that experiment took time to churn off. We now see that subscriber acceleration is happening as that treadmill effect has diminished. So, part of what you're seeing is that we're no longer losing subscribers at the same rate we were while also adding higher-value customers. We’ve also built a more robust sales motion and I want to give props to our large local sales force, who has innovated and improved productivity impressively. So, between these elements, we’re confident you will see desirable subscriber growth and ARPU expansion this year.

Super helpful. Then on ThryvPay, I believe you’ve had the product in the market for a bit more than a year now. How should we think about traction in that product?

Yes, it’s been steadily progressing. ThryvPay is about $400 on average in transactions. We see the number of transactions and merchants using ThryvPay gradually increasing. The challenge has been with ThryvPay Premium—launching it cautiously to avoid fraud issues. We initially thought this could ramp up quickly, but have chosen a slow rollout. The volume through ThryvPay in 2021 looking broadly is expected to double in 2022, based on current trends. The gradual uptake of ThryvPay Premium will help us attract new customers who will eventually adopt our broader Thryv solutions. Though we don’t make significant revenue from ThryvPay, it provides convenience for our customers and helps retain them.

Good morning, Joe and Paul, and thanks for the detail and taking the questions. Digging into the SaaS growth guide for 2022, can you elaborate on your expectations for ARPU growth and client growth? What’s embedded in the SaaS side about Australia?

I want to clarify that Australia is not as large as the United States; it’s more comparable to Texas. However, it will be an important growth driver this year. Their past year’s comp is small, allowing for strong growth. Regarding ARPU and subscriber growth, there is momentum driving ARPU growth forward. If you look at similar companies, such as HubSpot, they get about $11,000 per subscriber per year, while we are at $4,000. We have many products in our roadmap, and we will share more during our upcoming Investor Day. Customers tend to upgrade themselves to higher levels of Thryv quickly once they experience the value. Those who entered at entry-level offerings often move up to higher tiers, which drives ARPU. As we integrate the Sensis and Vivial acquisitions, we will be migrating some of those customers over to our offerings. While it may introduce customers with lower value initially, the long-term trajectory is for ARPU to rise, and I expect a solid jump from both subscriber growth in the double digits and ARPU growth that will drive our 20% revenue growth goal.

Very helpful. Just one more clarification on Vivial. Is the revenue you mentioned of $70 million to $75 million projected for 2022 accurate? And what’s that for EBITDA in relation?

Yes, you heard that correctly. We paid $21 million for Vivial, which we aim to integrate efficiently. For this year, we expect around $70 million to $75 million in revenue. Remember, we use a 2x EBITDA on a post-synergy basis. For 2022, it's not a full year's worth of revenue due to when we acquired it. Think of it as more of a pro rata basis depending on its contributions. You’re right on target with the $70-75 million estimate for revenue this year.

Hi, good morning, Paul and Joe. Thanks for taking my questions and congrats on a solid end of the year. Can you elaborate on the SaaS investments you are making this year?

Yes, you will notice that our investments are somewhat front-loaded. We are placing significant emphasis on engineering and product development to complete integrations for easier adoption. We commonly hear that small businesses dislike data entry, so integrating tools makes adaptation much smoother. Additionally, we're focusing heavily on international expansion, which involves compliance with regulations like GDPR. By front-loading these investments, we position ourselves to benefit throughout the year. Although this is a profitable SaaS company, our current strategy represents a return to a low EBITDA for investments that we believe will pay off in the long run. By the year's second half, the losses will be considerably lower due to earlier investments. Overall, we are working diligently on product and engineering, international prospects, and go-to-market innovations.

That’s helpful. With inflation rising, have you seen any impacts on customer sentiment or willingness to spend?

Although sales have been strong, I speak to customers every week, and they express concerns about rising gas prices and supply chain issues. These challenges make fulfilling orders difficult. The small businesses I encounter are not lacking in work; rather, it is fulfilling the demands that presents obstacles. Overall, customer sentiment in my ongoing discussions has been medium; while it’s not terrible, it’s not as positive as it was throughout the past year. We considered all of this when making our guidance commitments. We take our promises to investors very seriously.

In terms of capital allocation, we are currently focused on rapidly paying down our debt. Should we find another opportunity like Vivial, we would certainly consider it. Our primary focus right now is debt repayment.

I want to expand on Paul’s comment. Acquisitions are not our primary strategy. We have a thorough organic growth plan in place. We consider acquisitions opportunistically, particularly if they fall within our disciplined strike zone at the right price. We’ve been having discussions related to Vivial for six years; it had to be a price at which we could pursue it. We have conversations constantly, and I want to reiterate; our core plan emphasizes organic growth. We must have the engineering capability to develop our software as intended without relying heavily on acquisitions.

Hey, good morning, Joe and Paul. This is Shrenik on for Rob. Great quarter and an exciting shift towards subscriber growth instead of just ARPU as the growth lever. You mentioned 70% of your clients coming in as new and inbound marketing being a key driver in your growth. Can you elaborate on the mix of that growth?

I don’t have many specific details to share at the moment, but our franchise motion has accelerated beautifully. More agreements signed in 2022 compared to 2021. We’ve seen growth on the partner affiliate network. Our inbound motion remains a consistent incremental and gradual effort, allowing for steady organic traffic growth through patient lead conversion. This gradual growth keeps our customer acquisition costs aligned with their lifetime value. While I can’t break down growth by specific categories, it’s a healthy blend of contributors.

I’m sorry, but could you clarify your question about the timelines around the medium-term EBITDA margin target?

I want to clarify that moving back toward profitability is a deliberate choice we can make. Our SaaS business is fully scaled and profitable. If we needed to focus back on that aspect, we could adjust our investments in international projects or engineering to prioritize profitability. The board is satisfied with the progress we've made, and we’re going to take it one year at a time, reflecting on the commitments we’ve made to our investors.

This concludes our Q&A, as well as our conference for today. Thank you all for attending.

Before we conclude, I want to reiterate that we believe this is the decade of SMB SaaS. Last decade focused on enterprises transitioning to the cloud, while this decade will see SMBs doing so. By the decade’s end, we believe it will be standard for small businesses to efficiently manage their operations using Thryv. We will continue leading this trend. Our board’s recently approved investments are aimed at keeping us ahead of the curve.