Vertical SaaS And Cloud Migration Will Drive Long-Term Expansion

Key Takeaways

• Expansion of vertical SaaS and integrated platform offerings positions Thryv as a leading all-in-one solution for SMBs, driving revenue growth and client acquisition.
  
• Strengthening margins and new investments in marketing and channels support accelerated subscriber growth, higher retention, and durable recurring earnings.
  
• Thryv faces headwinds from legacy revenue declines, scale challenges for its SaaS offering, intense competition, and high SMB churn, threatening future growth and profitability.

Catalysts

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

• Analyst consensus believes ARPU expansion to the $8,000 range is achievable over time, but this underestimates momentum: evidence shows seasoned clients already spend $5,400–$6,000, and management expects robust ARPU gains from vertical SaaS offerings, which could drive revenue per customer far above current targets and accelerate overall SaaS revenue growth.
  
• While analysts broadly agree that print-to-SaaS migration and multiproduct adoption will stabilize revenue and improve margins, recent results point to a much higher ceiling-gross margin for SaaS expanded 430 basis points year-over-year to 74% and adjusted EBITDA margin hit 20% even as ARPU and multiproduct penetration remain in the early innings, signaling significant further margin expansion as operating leverage increases.
  
• The company's imminent move from legacy cost-cutting into "front foot" investment mode-with new financial flexibility, channel expansion, and direct marketing spend-is poised to reignite subscriber growth and accelerate top-line performance, compounding gains from the already strong base of 100,000+ clients.
  
• The rapid development and initial uptake of new vertical-specific offerings (like Thryv for HVAC) and platform extensions (such as Workforce Center) indicate Thryv is rapidly evolving into the all-in-one subscription backbone for SMBs, positioning it to capture an outsize share of the accelerating shift in SMB technology spend to digital and cloud platforms, which should drive both ARPU and new client acquisition.
  
• Unrecognized by the market, Thryv is uniquely placed to harness data analytics and marketing automation across its vast legacy and SaaS client base, creating a self-reinforcing flywheel: as SMBs deepen digital adoption, Thryv's integrated marketing, analytics, and workflow tools become increasingly indispensable, supporting recurring revenue growth, higher net retention, and enduring earnings durability over the long term.

Thryv Holdings Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Thryv Holdings compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Thryv Holdings's revenue will decrease by 14.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.0% today to 13.4% in 3 years time.
• The bullish analysts expect earnings to reach $64.9 million (and earnings per share of $1.3) by about April 2029, up from $307.0 thousand today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $21.8 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 5.6x on those 2029 earnings, down from 424.4x today. This future PE is lower than the current PE for the US Media industry at 15.4x.
• The bullish analysts expect the number of shares outstanding to grow by 0.98% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.68%, as per the Simply Wall St company report.

Risks

• Secular migration of small businesses away from legacy advertising and directory platforms toward integrated digital ecosystems, such as Google and Meta, could result in a sustained decline in demand for Thryv's core marketing offerings, constraining long-term revenue growth even as SaaS scales.
  
• Intensifying competition from platform giants and increasing industry consolidation risk Thryv's ability to compete on product innovation, ROI delivered, and pricing, which could compress net margins and limit overall earnings growth.
  
• Declining print Yellow Pages and legacy directory revenues continue to act as a structural drag on overall company revenue, and while SaaS is growing, the slow managed decline of Marketing Services (with a planned exit by 2028) may result in top-line contraction or stagnation if SaaS growth does not fully offset the loss.
  
• High SMB client churn due to small business volatility, price sensitivity, and competition pressures recurring SaaS revenue; if ARPU gains fail to consistently outpace churn or if subscriber count remains flat or declines, future net margins and earnings could be suppressed.
  
• Difficulty expanding beyond Thryv's legacy customer base and limited traction in new verticals or channels could restrict the addressable market; if efforts to scale software into new sectors underperform, this will constrain revenue diversification and future profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Thryv Holdings is $6.0, which represents up to two standard deviations above the consensus price target of $4.67. This valuation is based on what can be assumed as the expectations of Thryv Holdings's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $6.0, and the most bearish reporting a price target of just $4.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $484.7 million, earnings will come to $64.9 million, and it would be trading on a PE ratio of 5.6x, assuming you use a discount rate of 9.7%.
• Given the current share price of $2.95, the analyst price target of $6.0 is 50.8% 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.