SaaS Shift Will Unlock Broader Digital Opportunities

Key Takeaways

• Ongoing shift to SaaS and deeper client engagement drives improved margins, predictable earnings, and reduces churn for long-term growth stability.
  
• Expansion into automation, analytics, and new markets strengthens cross-sell potential, platform stickiness, and resilience against economic volatility.
  
• Reliance on legacy business decline, internal expansion, and vulnerable SMB customers amid rising competition and financial risk threatens growth and profitability during the SaaS transition.

Catalysts

Provides digital marketing solutions and cloud-based tools to the small-to-medium-sized businesses in the United States.

• Thryv's strategic shift from legacy marketing services to a predominantly SaaS-based platform-now comprising over 60% of revenue-positions the company to benefit from accelerating digitization among SMBs. This transition is expanding recurring revenue streams, improving net margins, and driving greater earnings predictability.
  
• Thryv's concentrated focus on expanding wallet share within its existing SaaS client base-through multi-product adoption and cross-sell initiatives-is driving higher ARPU (average revenue per user) and materially reducing churn, as customers using two or more products experience churn rates up to 50% lower. This dynamic enhances both topline growth and long-term earnings stability.
  
• The successful integration of Keep has expanded Thryv's automation capabilities and partner distribution channel, directly tapping into new verticals and geographies and enabling a broader range of workflow and automation solutions. This cross-sell synergy is expected to provide incremental revenue sources and faster international growth.
  
• Enhanced data analytics and marketing automation products (e.g., the Marketing Center and its performance-oriented add-ons) play into SMB demand for measurable, data-driven ROI, supporting greater platform stickiness and upsell opportunities-directly benefiting both net retention rates and long-term revenue expansion.
  
• The company's alignment with resilient, nondiscretionary SMB verticals shields it from economic cyclicality while broader macro uncertainty (combined with prudent guidance) has likely led to overly cautious market sentiment, creating potential for positive earnings and revenue surprises as digital transformation continues to accelerate.

Thryv Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Thryv Holdings's revenue will decrease by 3.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from -12.0% today to 19.9% in 3 years time.
• Analysts expect earnings to reach $139.5 million (and earnings per share of $2.99) by about July 2028, up from $-92.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.2x on those 2028 earnings, up from -5.6x today. This future PE is lower than the current PE for the US Media industry at 17.8x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.35%, as per the Simply Wall St company report.

Thryv Holdings Future Earnings Per Share Growth

Risks

• The company's ongoing exit from the Marketing Services (legacy print and directory) business, planned for completion by 2028, means a significant source of EBITDA and cash flow is in terminal decline; unless SaaS adoption and expansion meaningfully outpace this decline, overall revenue growth and near-term profitability could be pressured during the transition period.
  
• Thryv's growth strategy is currently highly dependent on expanding revenue within its existing customer base, as reflected by the sales reorganization prioritizing cross-sell and ARPU expansion over new customer acquisition; this creates heightened risk if expansion slows or competitors offer more compelling alternatives, directly exposing net revenue growth and earnings predictability to customer churn and limited switching costs typical of SMB customers.
  
• The company signals high reliance on small, non-discretionary service businesses as core customers; while these are described as "resilient" to recession, they often have elevated business mortality rates, and any macroeconomic downturn or industry-specific disruption could increase churn, impacting long-term retention targets and recurring revenues.
  
• Intensifying competition from both large-scale tech platforms (e.g., Google, Meta) for digital marketing spend, and from affordable, DIY SaaS tools (e.g., Wix, Squarespace), could erode Thryv's differentiation and pricing power, potentially compressing net margins and necessitating higher R&D or marketing spend to defend market share.
  
• Increased operating leverage, including a $298 million net debt position and a 2.2x net debt/EBITDA ratio, raises financial risk during a period of business model transformation; any shortfall in SaaS growth, higher than anticipated churn, or macroeconomic headwinds may challenge deleveraging plans and pressure both earnings and financial flexibility.

Valuation

• The analysts have a consensus price target of $21.75 for Thryv Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $26.0, and the most bearish reporting a price target of just $16.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $699.9 million, earnings will come to $139.5 million, and it would be trading on a PE ratio of 10.2x, assuming you use a discount rate of 7.3%.
• Given the current share price of $11.82, the analyst price target of $21.75 is 45.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.