Ladies and gentlemen, thank you for joining us and welcome to the Thrive 3rd 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've dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute your line when prompted. I will now hand the conference over to Cameron Lessard, Vice President of Corporate Development and Strategy.

please go ahead good morning and thank you for joining us for thrive holdings third quarter 2025 earnings conference call with me today are joe walsh chairman and chief executive 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. Reconciliations of these measures can be found in our earnings release. As a reminder, on this call, SAS revenue reflects the combined performance of Thrive and KEEP. We will only specify KEEP's performance when discussing its revenue contribution for the quarter and fiscal year. With that, I'll turn the call over to Joe Walsh, Chairman and CEO. Joe?

Thank you, Cameron, and good morning, everyone. I'd like to give you an update on our business transformation, some of the progress that we're making, and then Paul will take you through this quarter's numbers after that. First thing I want to do is update you on our Grow Conference. Two weeks ago, we had out in Arizona a small business growth conference. It was broken into two pieces. The first couple of days were a partner conference. A lot of the partners that both Keep and Thrive have, which is really now one partner community. And I have to tell you, when we first met them a year ago, they were a little bit angry. They were saying, you know, we've not been invested in enough by the prior ownership of Keep. And, you know, we feel like you owe us certain deliverables. And so I must say our partner results this year have been okay, but they've not been the kind of big lift that we were looking for. And so we worked really hard with these partners to figure out what kind of updates they need, what kind of partner portal they need, what kind of REST API updates, what kind of product improvements, and which things really mattered. And we've delivered a lot for them. And so this partner update was like Christmas, us delivering on the value that they were looking for. And so I have better expectations as we go into 26. I think these partners are pretty impressed at the pace at which we are delivering and innovating software. So that was great. And the second part of the conference was small businesses. Hundreds of small businesses came in. Obviously, some existing customers came to learn more about how to use the tools. But I was surprised at how many prospective customers came, customers that are in some cases are on some other tool or aren't on any tool who came to learn more about how to market their business. And we presented to them a really simple growth model of market, sell and grow and show them how particularly marketing center can give them the foundation for growth. Marketing Center is our fastest selling product. It's really become the tip of the spear for us as we've settled in on this kind of market sell growth strategy. And it really gives you all the good hygiene. It gets your listings managed all across the web. It gives you a well-built website that's not only search engine optimized, but it's answer engine optimized, which is really important because the answer engines are gaining share every day. So we've built the knowledge graph on these sites and we're continually tweaking the sites to make sure that they're really answer engine friendly and bringing you up high on those results and so that's been you know really big as well when you have a marketing center you have call tracking numbers so you can track results everywhere online offline so you can figure out the truck wrap that you have does that pull calls the yard sign you have in front of the job that you're doing when you're doing stuff in social how is that pulling? And you can even look at one social, you know, sort of personality versus another and what's pulling the best. If you're running search campaigns, you can track everything. And what we're finding is a lot of people are using Marketing Center, even if they're using someone else's CRM, that they might be on one of our sort of competitor CRMs, but then using Marketing Center in order to manage their marketing because it's the best thing available in the market. So we're pretty excited about the progress we're making there. The GROW conference was really a confirmation that these small businesses want to get their marketing right. They really want to find a way to be found and consistently measure what's working. So we're excited about that. We were also able to update the attendees on the AI developments that we've experienced. We're rolling out lots of AI within the software. We've got social captioning where when you do social posts, it can help you write that social post in your personality. If you are posting a photo, it can help you caption that, suggest several captions. You can pick the one that you think works the best. Review response is a big deal because lots of these small businesses have a tough time keeping up with reviews. So the software goes and finds a review, brings it to you, Make sure you don't miss it and suggest several review responses. And you can just pick the one in the middle or, you know, the one that you think is the best voice for you and it posts it and it's all taken care of and you don't have to kind of make a sticky note to remember to do it. It's all happening in real time. Your listings, it is helping you with everything, with service descriptions. You know, if you've got a new area of your business or something, you can use the AI to help you write a very professional service description of what you do so that, you know, not all of our customers are the best wordsmithers, so it kind of gives them a more polished face. Everything to do with websites. You know, we've got, obviously, a service that we provide as a company to build big, powerful websites for customers, but sometimes they don't need all that, and so we've got a simple AI website builder now. It'll be out in a couple of weeks that will allow a small business to come in and just spin up a quick website using AI. Copywriting assistant. You know, when you're sitting there and you're doing any kind of copywriting for landing pages or trying to build a little email campaign, we've got that built right into the tool where that's happening. You've got call analysis. This is something we've had in beta for a little while. It's working really well where it takes your calls and actually gives you a transcript of the inbound call and then does lead scoring on it. I was talking to one of our partners at the conference who was in on the beta and he was telling me about a dentist that he has out in the Pacific Northwest who over a two-day period of time got 27 leads. He got a full transcript of the entire call and they were all lead scored. And the lead was, the dentist was just dumbfounded. He said, I can't believe this. you know that this 27 leads um and you know they're scored all the details and the partner said hey it's just the beginning this is the future this is what these guys are delivering so really excited about uh the lead scoring and call analysis so uh ai is being used throughout the product to make it easier for small business people kind of meet them where they are and obviously, AI is doing a lot internally for us as a company. All the fulfillment that we're doing, where we're building sites, doing social, we're using AI to amplify our productivity. Our legal department uses it. We're using it in accounting. We're using it all over the company. So, you know, you've probably heard from other businesses that they're finding, you know, meaningful efficiency there. And then maybe most importantly, in our software development team, you know, they're using all the latest tools to amplify and speed up the roadmap of development. And then obviously using AI for QA, trying to make sure that the quality is there and speed up the process of finding if there's already bugs, get to the bottom line, get it sorted and get them squared away. So AI has been a big lift for us. It's been a big part of our progress that we've made this year and really feel as though the availability of AI in the software is a big tailwind for us as we go into next year. Really excited about that. So I've got a couple other comments to make later, but I know you're anxious to hear the numbers. So let's turn it over to Paul and let Paul take

you through the numbers. Paul? Thanks, Joe. Let's dive into the numbers. SAS reported revenue was 115.9 million in the third quarter representing an increase of 33 percent year-over-year keep contributed 16.8 million in the third quarter excluding keep thrive sas business grew 14 percent year-over-year sas adjusted gross margin increased 80 basis points year-over-year reaching 73 percent In the third quarter, SaaS adjusted EBITDA increased to 19.6 million, exceeding guidance and resulting in an adjusted EBITDA margin of 17%. We ended the third quarter with 103,000 SaaS subscribers, including 13,000 from Keep, representing a 7% increase year over year. With a large established customer base now in place, our focus is on increasing spend per customer by driving adoption of more products and solutions, especially among our high-value clients and larger businesses. This approach meaningfully expands SaaS lifetime value and is a more efficient driver of profitability. In the third quarter, overall SaaS ARPU reached $365, with Thrive at $355 up sequentially and keep ARPU remaining strong at $437. Seasoned NRR declined to 94% this quarter, primarily reflecting noise introduced as we transition legacy digital marketing services clients onto our modern SaaS platform as we systematically wind down older tech platforms on our marketing services side we are upgrading clients to our current software offerings while honoring their previously committed pricing vastly improving the value they receive but introducing a wave of smaller accounts into to our base, which temporarily impact ARPU at the time. These accounts from our Q3 2023 migration are now cycling into the seasoned NRR calculation after crossing the 12-month threshold. The performance we're seeing from this group is consistent with the minimal initial commitments and lower propensity to expand spend compared to our higher-quality software clients. This is all part of a broader business transformation, and while some SaaS metrics will show temporary noise during this transition, we are making steady progress building a solid software client base with strong underlying fundamentals. Multi-product adoption continues to accelerate in the third quarter. Clients with two or more SaaS products grew to 17,000, or 20% of our base, compared to 15,000, or 16%, a year ago. Five centers per client was 15% at the end of the third quarter, compared to 12% in the prior year. Moving over to marketing services, third quarter revenue was $85.7 million and above guidance. Third quarter, marketing services adjusted EBITDA was $21.2 million, resulting in an adjusted EBITDA margin of 25%. As anticipated, this quarterly performance is subject to the dynamics of the print schedule, which performed better than expected and returned to a normalized level starting in the second quarter. Third quarter, marketing services billings totaled $70.6 million, down 33% year-over-year, reflecting the intentional shift in our strategy. As we continue to initiate upgrades of the legacy digital marketing services products for clients to our SaaS platform, the decline will persist but at a managed pace, we remain on track to exit marketing services by 2028 with cash flows lasting through 2030, ensuring strong liquidity as we fully transform to a pure play software business. Total company billings were 184.2 million, down just 4% year over year, underscoring the company's steady progress as it transforms into a leading SaaS business and positions itself to stabilize total revenue and return to sustainable growth. In the third quarter, we generated free cash flow of $14.6 million, which brings the year-to-date free cash flow to $18.8 million. We ended the third quarter with net debt down $9 million to $265 million, bringing our leverage ratio to 1.9 times. Turning to our outlook for 2025, for the fourth quarter, we expect SaaS revenue in the range of $118 million to $121 million. For the full year, we are updating our SaaS revenue to a range of 460 million to 463 million for the fourth quarter we expect SAS adjusted EBITDA in the range of nineteen point two million to twenty one point two million for the full year we are raising SAS adjusted EBITDA guides to a range of seventy three million to seventy five million for the full year we expect marketing services revenue in the range of $323 million to $325 million. For the full year, we are updating marketing services adjusted EBITDA guidance to a range of $76 million to $78 million.

Now back to Joe. Thanks, Paul. I'd like to talk a little bit about our vertical initiative. We talked earlier this year about our HVAC vertical. We had taken the Keep Automation Tools and Thrive Marketing Center and kind of packed them together and created these really interesting vertical applications. The first one that we applied was to HVAC. And, you know, I was recently talking to the kind of the pilot or pioneer customer on that. And they have been really pleased. They've gotten a very strong response from what we put in place. And I just want to give you some sense of the statistics that they've given us. They've had around a 10% lift in jobs booked, a 25% increase in total revenue. They're generating 50-plus qualified leads every month. And they're seeing an increase in repeat business, about 12% increase in repeat business, because the automations have automated reminders that are reaching out and tickling their customers and saying, hey, what about this? What about that? And it's stimulating business out of their base. They also had felt as though they weren't as good at social media as they'd like to be. You could put almost any small business in that category. And they've seen a 45% boost in engagement in their social tools and what they're doing with social. So they are really happy campers. We've had very strong sales within our HVAC vertical. And we're now about to roll out a broader home services vertical that gets at more of the home improvement type broader categories. And we've got a bunch queued up behind that. So the model that we used, where we use the automations, customize them around the vertical, is, I think, a terrific model. I want to say one other thing, just for those of you that are thinking about how we fit in the market and our competition and all that. This customer I've just described in detail how happy they are with Marketing Center, they are a service-tightened customer. This is a very big HVAC company with tons and tons of trucks on the road. and they are a service titan customers service titan tracks the freon and the wing nuts and where the trucks are and we handle the marketing and that paradigm i think is increasingly building where people are using some you know really deep vertical crm and then using our um you know our tool for the marketing and you know we do have a crm our crm is more a horizontal we haven't you done as much deep down in the verticals. So when you get to a larger, more sophisticated business, they often are using one of these in-industry CRMs. And that's fine with us. We're agnostic about that. Our marketing center fits perfectly in with that. And we've got a lot of integrations and we're adding more all the time. So I want to just say that one of the pieces of this transformation journey that's happening, as our software platform is building out now and becoming more complete we're beginning to move up market now you might say well joe your arpu has been bouncing around it has bounced around because we've been converting legacy uh marketing services people off of platforms in some cases they came in at pretty low billing numbers because we were looking to just shut down a platform and we allowed them to come over and we we kind of grandfathered in their their preferable rate that they'd had in the past but in terms of what we're selling, we're moving from that $4,000 to $8,000, a very rapid clip. Our U.S. field sales force is selling up in the $6,000 range with the run rate sales that they're making every day. And as we build products, as we're focusing our marketing initiatives, it's all moving upmarket. And so upmarket has been a big deal. And one of the things we've been looking at lately to try to help investors understand that is we've been looking at the $400 and up a month segment, which is growing steadily and strongly and has grown very predictably. And these customers have very good retention metrics. We make good margins on those customers. And it helps sort of weed out the noise that's there with some of the smaller customers that have come in through these conversions. So we'll talk about that more in the future, but our transformation as a business is continuing at a nice pace. And as my last comment here, I want to mention Sean Wechter, our new chief technology officer. I think his middle name could potentially be AI. He is all AI all the time. And we're really excited about what we think we can do with Sean in the year ahead to really up-level even further our integration of AI and our pace of throughput through our engineering team. So I'm really excited to welcome Sean to the company, and I'll stop there and turn it over

to questions. Operator? Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise raise your hand now. Please stand by while we compile the Q&A roster. Your first question comes from the line of Scott Berg with Needham & Company. Your line is open. Please unmute

yourself, sir. Hi, everyone. Thanks for taking my questions here. Joe, I wanted to start off on the SaaS business. Obviously, growth remains reasonably strong, but you did miss your guidance in the quarter on a very minimal amount, but did come in at the very low end of the range. Help us understand kind of what's happening, whether it's on the new sales side or the expansion side to kind of drive the results versus your expectations 90 days ago.

Yeah, I mean, look, we, as you say, we are making really good progress transforming, you know, what used to be a phone book business into a SaaS software business. And there's a lot of execution involved. And, you know, our execution wasn't flawless in this quarter. You know, you guys often ask me about the macro and, you know, whether it's the economy. I can't blame anything outside at all. You know, our execution just was, you know, a smidge shy of where we wanted to be. And I think we are doing the things that we need to to make sure we continue to execute even better going forward. So I don't think there's any big message or any big trend here. You know, we just didn't deliver it perfectly. But I don't have any complaints about the market or anything like that.

And then in your pre-scripted remarks, Joe, you had talked about how, I'll paraphrase, partner results have been just kind of okay to date, maybe relative to your expectations. um where how do you i guess how do you improve some of that partner opportunity with the uh with the with the keep ecosystem that that you all obviously brought over is this purely just a function of of the additional innovation that you spoke about with some more time with these partners or as you've had a chance to kind of work with them the last nine months or so have you been able to find anything else differently maybe that you have to um implement in your strategies there to maybe leverage that ecosystem even more.

Yes, Scott. I mean, you know the old Infusionsoft Keep really well, and they had primarily built their business through the partner channel. They used to have those really gigantic icon conferences with over 2,000 people, and it was partner-driven. And then under some different leadership and ownership or whatever, they sort of pivoted away from partner and attempted to try to build a more down market direct channel for a few years and they really the partners you know felt neglected and so when we showed up at the initial grow conference which was days after we made the acquisition you know I had a line of partners wanting to basically not yell at me but pretty close and say, you know, we've been neglected for years. You know, you guys, the innovation has slowed down and, you know, some of the basic tools and things that we need, we haven't been getting. And these guys haven't really been listening to us. And, you know, I hadn't fully understood that during the diligence process. I was thinking we could, you know, dump some gas on the fire and really get that partner thing rocking right away. And, um, you know, they, they wanted, they, they wanted some service first. And, um, so we've worked really hard over the course of this year to, to listen to them, prioritize their needs and begin delivering them. And we have in fact delivered a bunch of them. And, um, the feedback I got at our grow conference, uh, two weeks ago was way to go. We really appreciate it. And I think that the partner morale and enthusiasm for what we're doing is rising beautifully right now. And I think some of these partners work across different tools than just Keep. It's not the only thing that they do. They also work with other partners. And I think, you know, they're, they're, they're turning our back our way more excited about what we're doing. So, you know, I was probably polite when I talked about last year's partner performance, it was it was weak, you know, compared to what I was counting on. It's probably the primary difference in the results versus what I'd planned. But, you know, having just pressed the flesh and spent, you know, three days with a whole bunch of them, I have a really good sense for a re-acceleration in 2026 based on what we've done and based on several deliverables that are coming out over the next number of months. So I don't think it's a permanent or terminal problem. I think it's difficult when you do an acquisition to really know all the sentiment and all the momentum around everything that's going on in the business. And I still would have done the acquisition. I'm still happy with it, still excited about where we are. There just was a little bit of a one step back before we could move forward. Thank you for all for taking my questions.

Thanks, Scott.

Your next question comes from the line of Jason Crayer with Craig Hallam. Your line is open. Please go ahead. Can you guys hear me okay?

So, Joe, look, you just held this user conference. I was just curious, you know, any takeaways from customers as far as what the current environment feels like, any changes to purchasing decisions? You know, you had admitted in the last question that, like, you're not blaming the macro or anything, but just give us a tone for how things feel out there.

You know, I think they're pretty decent. You know, I've said to you before, you know, generally speaking, our customer base fix the nasty things in life. So, you know, we're not doing high end retail here or dining or, you know, all the consumers a little soft or that's really not us. When you're, you know, air conditioning doesn't work or it's cold in your house or, you know, you have a broken window, you call our guys and they take care of it. So we're not that economically sensitive. When we don't deliver, it's mostly our fault. I really can't. I know there's probably better people for you to tap into the the macro. We we really even if even if the macro were crappy, we could still crush our numbers with great execution. It's really down to us. So, you know, having said that, you know, just just talking to people, I think the market's fine. I don't really think there's any, I mean, obviously, it's a bifurcated market, the highest end of the consumer, you know, owns stocks and is watching them go up and is excited about it and seems to be, you know, a little softness at the other end. I mean, just, it seems to be a general observation, but I don't think that's affecting Thrive's results.

Appreciate, appreciate the thoughts nonetheless. Wanted to just follow up on the vertical sales emphasis, you know, the HVAC stuff. As we look out over the next several quarters, how does this manifest in fundamentals? Like, is this drive NRR? Does this curb churn? You know, is this grow ARPU? Like, maybe you can walk through what we should expect over the next several quarters.

Yeah, I think it will certainly be gradual. You know, we're not, we got a pretty big company with a pretty big customer base. So we can't just, it isn't going to instantly be all vertical all the time. But Jason, the thing that we're trying to do is move from $4,000 a year per customer to eight. And as I mentioned, the run rate of our premise sales team is more like six grand right now. And the overall numbers lower in part because of some of the conversions of legacy marketing services. And some of those people have come over at much, much lower price points. And I mean, just for the avoidance of doubt, our sales force isn't even calling on them. We don't really call on anybody at much under about $350, $400 a month. They're sort of inert, just doing their thing. We're not really working that group very hard. So it's hard to get much NRR out of people you aren't even calling on. So anyway, back to what's going to happen with verticals. I think these these early sales in the verticals that we've working have been coming in, you know, more like the eight thousand that we're going for, like right now. So we're ending up making larger sales and we're selling to a little bit larger businesses, which is ultimately our goal. This might surprise you, but, you know, a solopreneur who has less than $500,000 of revenue is churnier than a business with, say, a million or a million two or a million five of revenue that has, you know, seven, eight, 10, 12 employees. And, you know, in our base, we still have, you know, a reasonable number of these solopreneurs. And that's where some of the churn noise comes from. So what the vertical push is allowing us to do, and as well as a number of other things that we're doing in our whole go-to-market data strategy, is we're putting our sales resource against a little bit bigger businesses. These are not giant companies. We're talking about 10 employees, 15 employees. But we're calling on those little bit bigger employees that are, excuse me, a little bit bigger businesses that are a little bit more stable. And the vertical program is allowing us to really get traction there, because sometimes when you call in a bigger business, they'll say, oh, I already have a CRM because, you know, we obviously we offer a CRM. But what they what they often are not happy with is how they're managing their overall marketing, how they're measuring their marketing, how they're doing with social media. A lot of them are befuddled with the answer engines, concerned about trying to make sure that they're coming up high in the answer engine results and don't really have an answer for that. They need some help. There's a number of elements there. Some of them are doing search engine marketing with some guy out of the trunk of his car and it's OK, but not that great. They want to professionalize it and they want to be able to measure how it works. So we're a great answer in all those areas. And so increasingly what's happening is we're sitting in alongside of other people's CRMs and where we're doing the marketing and they're doing the back office stuff. And so I think you said, you know, what will we see? I think you will see steady improvement in ARPU. I think just, you know, the things that have drug us closer to $4,000, you know, I won't say we're all the way through, but we're through a lot of that. And I think that, you know, our sales organization have a lot to sell now. We've built out the product line a lot. and i think we'll be we'll be able to make larger sales to customers on which we'll make higher margins have lower churn and you can see it when you look at that quality metric beginning to really settle in and move and i don't focus as much on the absolute gross customer amount i'm focused on building that quality metric because there's a little bit of noise in our base from some of those conversions. So anyway, that hopefully gives you some sense for, you know, the vertical strategy, Jason. It gives me great sense. Thanks, Joe. Appreciate it.

Your next question comes from a line of Arjun Bhatia from William Blair. Your line is open.

Please go ahead. Perfect. Thank you. This is Alinda Lee on for Arjun Bhatia. Thanks for taking the question um with the on board of cto sean um for a little over a month now joe what are the early strategies in the works to achieving operational efficiency product acceleration

and also ai innovation yeah uh ai i mean he sean i sean's a all ai all the time and And the guys he's bringing in are all AI all the time, too. And, you know, not that our team wasn't. We were doing a really good job with AI, but he's taking it to another level. I mean, he's, you know, focused on it. And I think really inspecting what we expect, making sure, you know, they have at the ready all the tools that they want, that they're using them, looking at how they're using them. And so I expect the output of that to be, as we span across 2026, the pace of development against our product roadmap, I think will quicken. It's been quickening already. We're doing a good job. But I think you're going to see it go faster. And I'm excited about that because there are a bunch of things these larger customers we're working with are looking for that I think we'll be able to deliver quicker with this thinking and this approach that he's bringing. The second thing I'd say about Sean is his recent background with Boomi was all about integrations and making software work together. And as you move up market, as we are now doing, you must be able to work and play well with others. You've got to be able to have interoperability because a going concern, even one with 12 or 15 employees that has some workflows, doesn't want to change them all in order to embrace your tool. even if your tool is great. And so you've got to be able to dovetail with what they're doing. And as he's often saying to me, Joe, this is a solved problem. It's something we can handle. Don't worry about it. And I just really appreciate that confidence there. And Sean is just an incredible leader. And he will lead our tech organization in a way that I think will create high morale. His sort of NPS scores, if you will, that he gets his morale scores when he leaves a team are exceptional. And I think we'll just have a faster roadmap with a

bunch of happy campers in our development teams. Awesome. And with the new vertical product in home services, are you approaching the product development in a similar way as with Thrive for HVAC, where you work with the industry leader in the market in creating that product. How should we think about just product roadmap in the future in terms of vertical play?

Yeah, I think, you know, it's, as you know, we've got these powerful automations that are kind of, you know, if, when, if, when, if, when, you know, processes. And it's a question really of working with a leader in the space and understanding what best practices are, what they do. And once you get inside of home services, whether it's electrical or roofing, they start to get to be pretty similar. There can be some nuances around insurance or, you know, some other details, but there are a lot of similarities. So you're not starting from scratch. So that team are working hard. I was talking to the leader of the team last night about the sales organization's ability to actually digest the pace that he thinks his team can run at and cranking these verticals out. So we, you know, it's a chicken or egg problem. Initially, we needed the verticals and now he's turning them out and it has a roadmap to turn them out maybe faster than we can train on them and absorb them. So that's we're thinking about how to manage that and how to deal with that. But, yeah, so they just find a strong business and spend time with them and map it out.

Awesome. Thank you.

Thank you very much. Appreciate it. Your next question comes from the line of Zach Cummins with B-Rally Securities. Your line is open. Please go ahead.

Thanks. Good morning. Appreciate you taking my questions. Joe, I wanted to start off just a little more focused on these answers-based engines. I know it's been a big concern for many publishers and small businesses around visibility of their websites within this evolving dynamic. So can you talk a little bit more about what Thrive's doing to make sure that your customers are remaining visible within these answers-based engines?

Oh, I'd love to. That's great. We've spent a lot of time understanding how the answer engines operate, what makes them bring back results, and so on. And I'm not today going to go through every detail of that with you. But all in all, we think it's a really good thing for us, Zach. It's a tailwind for us. Because remember, we have been competing with Google for years. If you go back 20 years, we had more traffic than Google did. We were the giant thing with yellowpages.com and Dexknows and Super Pages. And we had these big sites. And we still have these big sites. They still have a lot of traffic. But over time, Google spent a lot of time trying to compete with us and basically take away as many of those references as they could. And all of a sudden, with the answer engines, Google's just hammerlock on all things search is broken. And are they the majority? For sure, still the majority. But now these answer engines often go and they look at yellowpages.com or Dexnos or Super Pages or our similar sites in New Zealand or Australia, and they bring those authoritative answers back out of that content and not getting it from Google and Google can't have any influence on what that search result is. So, you know, we've got the really is a pioneer in the Internet age sites of these online Yellow Pages directories with with very authoritative, very detailed, very rich content about small businesses in Tupelo, Mississippi, Rapid City, South Dakota that never really embraced Google. And those answers are popping right up in these answer engines, which is awesome for us. It's allowing us to deliver more value than we might have without this. So that's good. And then secondly, remember, we build and host websites for people, some 54,000 or something like that at the moment, and more coming in every day. And we're really good at this. We understand how to create sort of a knowledge graph in a way that the answer engine is looking for it. And we understand how to do AEO, answer engine optimization, how to make sure that everything about the way we present a small business's information, both on their site and even off-site, if we're working with them in social or some of the other listings management areas that we care for customers and some of our add-ons, and we can optimize them and help them do better. And that story I mentioned briefly about the partner who had the dentist, in addition to just, you know, going with Thrive, he had also authorized doing some of these extra things. And that 27 leads overnight was like a shock for that guy. He was really excited about it because he basically turned the spigot on and let us do our thing. And the answer engines are a part of our thing now. So, you know, I would say if you offered me a world where, you know, I had the answer engines or not, I mean, I would take them all day and twice on Sunday. I mean, it's really been great for us. And I don't mind Google loosening their grip just a little bit on

everything. Understood. And my one follow-up question is just around balancing ARPU expansion with looking for ways to continue to grow the customer base. Obviously, ARPU expansion has been the bigger driver here in recent quarters, and it looks like that's going to continue to be the case as you get more quality customers within that SaaS customer base. But can you just give us a sense of maybe when we hit that inflection point and we start to see stabilization in that gross customer count and maybe you're getting a little more of a balanced contribution

from both customer growth and ARPU expansion? Yeah, look, we have a bunch of very specific initiatives underway to, um, build our business outside of the zoo. Um, but if, if we were just to rush out there naked and try to do it, we would be just like any other software company and we'd be dealing with, you know, cost of acquisition that didn't play well with the lifetime value, you know? And, and, and so, um, we've had a real, uh, almost unfair advantage by having this gigantic customer base of people that like us who take our phone call, talk to us, and we're leveraging. And so let me answer your question this way. If we started, let's just say we didn't add any customers. We just replaced churned customers and just hung out where we are. We could still take this business from, you know, the whatever it is, you know, a little less than 500 million revenue we're running at right now to eight or 900 million revenue just by just by doing what we've talked about, you know, growing the ARPU in the base. So we have you're going to see us grow very strongly and do a very good job even before we add anything. And then in terms of adding, you know, we're obviously managing the economics of the adding, making sure that the, you know, the model of our cost of acquisition to lifetime value is right. And when you make larger sales to a little bit larger businesses, that's all a lot easier. So we're working on processes internally to do that. But I would say, you know, at the moment, we're not pushing really hard for really any sub growth in the next short period of time, the next few quarters. We're getting strong growth by making sure all those customers that we brought over are getting, you know, visits, a lot of cases, in-person visits, or, you know, in some cases could be online visits, Zoom visits, but we're spending time with them, making sure they understand what they have and talk to them about their options to do more. And that's super productive for us right now. Our sales force is really happy because they're writing a lot of business doing that. So we don't have an emphasis on pushing that number up. I wouldn't be in your modeling saying we're going to put huge gains in the short run on that base. I think over the long haul, we will. But in the shorter run right now, we're pretty focused on betting down and engaging and growing the ones that we've brought over.

Understood. Well, thanks for taking my questions.

Thank you.

Your next question comes from Matt Swanson with RBC. Your line is open. Please go ahead.

Oh, great. Thank you guys for taking my questions. I really appreciate the quality SaaS client metrics, new disclosure, as you mentioned, reducing a lot of that noise. Can you just talk a little bit more, maybe as a follow-up to that last answer, of the trends you're seeing within that cohort, especially now that we've gotten to 77% of the client base, the assumption would be that that group is going to start to be much more broadly reflected in the business results overall. So just kind of trends that you're seeing in that group relative to, you know, the overall business.

I'd love to. And I really, Matt, I appreciate the question because it's really at the heart of this. You know, I think sometimes people look at our business and they have a hard time really perceiving it because it's in transformation. And you see the top line revenue bouncing around based on the pub schedule, you know, within the print business as it runs off. And then there are customer bases or customer groups, in some cases that came over in clumps, some of which are pretty far below the spend levels that we're spending time with our field sales force. And so it creates noise in the numbers and you're like, OK, what's the pattern here? And so I think if you look at these customers spending $400 or more, you know, they tend not to be sole openers. They tend to be, you know, businesses with, you know, multiple employees and, you know, a little bit of billings. They're actually kind of real companies. And so, you know, they tend to churn less. And their willingness, their interest, their ability to buy more tools from us, buy more software from us and utilize it is greater. And so we find we're able to talk to somebody in the business who's managing, you know, the marketing or managing the software. And we're able to, you know, work with them and talk with them about that. So that's very rewarding for us. And a lot of times these businesses are also succeeding. They themselves are growing. And so, you know, year over year over year, they have more revenue, they have more resources, and they have a greater ability to buy more. And it's a virtuous circle where our offerings are helping them get leads and grow and build their order book. And with that growth, they then can buy more stuff. They start getting more and more employees, then they can put them on Workforce Center and all these other kind of virtuous circle things. So that's pretty much what we talk about every day in the company and what we're working on is these these customers that we're actually able to spend time with and work. And we have kind of a little bit of a sort of an unwritten rule, but, you know, we're trying to service those very tiny customers through, you know, online channels and chat and so on and really not spend as much time with them because it's obviously our time is super expensive. So we're spending time with the larger businesses where we think there's upside to grow. So I think you will see over the coming quarters, that quality metric is what we've accomplished. And you're going to see that thing steadily building. And they're buying multi-product. Their spend levels are good. Their churn levels are fairly low. And I think you'll see us building on that. And that's really the core of what we've established here through this process.

That's really helpful. And then I just wanted to kind of combine two comments that we made earlier in the call. At one point, we were talking about there's some regions that, you know, in the SMB space never like fully adopted things like Google. And now we're rolling out, you know, AI and optimized search. And I just, I was curious about, first, you develop the products, and then also, how do you go to market with some of this, you know, brand new cutting edge technology, the businesses that might be a couple generations behind technology wise, and really like letting them know, or like perceive kind of what the value to them is going to be from this?

We were just talking about this yesterday. You don't go around, you know, walk in there talking about, you know, automations and AI and, you know, blowing their mind. You make it pretty simple. um and you know you you talk to them about their their ads and listings in the directories uh making sure they're right making sure their listings are correct all across the web making sure they have a good hygiene basic website and a good foundation you keep it all pretty basic and straightforward but you know like that ad in the old days for the uh tomato sauce ragu you know it's in there they used to say it's in there um if they have questions about any of these latest things. You can explain it's in there. I mean, AI is right in there and it's available, but we don't lead with that. You can intimidate a customer really quickly with a bunch of acronyms and throwing around all kinds of fancy terms. So we try to build it up off of a foundation and marketing center is an amazing foundation. You know, for a century, people have been saying, I know a lot of my advertising is wasted. I don't know what it is. And within Marketing Center, you can tell exactly what works. We are able to put call tracking numbers on offline things, online things, everything you do. You can take a look at heat maps for your website, bounce rates for your website. You can put widgets on your website, chat tools, every which way somebody can come at you. We can measure it and facilitate it and improve it through Marketing center. And, you know, for a lot of people, the money they spend on outreach to try to make the phone ring and bring in more leads is near and dear to them. And the promise of having a way to optimize it and measure it and then tie it back to their order book, even for somebody, you know, in Rapid City, South Dakota, that's something that's an exciting prospect. And we just try to keep it, you know, keep the jargon out of it. And remember, we've got a guy that's been in Rapid City, South Dakota for 140 years. Maybe not that exact guy, but as a company we have. We started in 1886. So we have that relationship. We're there. We're already working with them. And those flyover places, we do really, really well in those flyover places.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.