Thryv Holdings, Inc. (NASDAQ: THRY) has received a positive outlook from Craig-Hallum as the firm initiated coverage on the company's stock.
The analyst set a Buy rating with a price target of $25.00, citing a misunderstood growth story within Thryv's SaaS segment.
The analyst pointed out that the market's perception of Thryv is overly focused on the declining legacy Yellow (OTC:YELLQ) Pages business.
The view overlooks the potential in the company's software-as-a-service (SaaS) offerings, which have been experiencing significant growth. The SaaS segment is showing promise with a consistent 20%+ growth rate and expanding margins.
Thryv's existing relationship with approximately 300,000 small and medium-sized businesses (SMBs) through its print-based services is seen as an advantage.
The relationship is considered a channel for cross-selling SaaS solutions, with nearly 100,000 clients already transitioning to Thryv's integrated, recurring revenue model.
Finally, the introduction of free trials to Thryv's key solutions is expected to be successful in attracting new customers. The analyst believes that these trials will unlock greenfield opportunities and further bolster the company's growth in the SaaS market.
In other recent news, Thryv Holdings, Inc. has reported a robust growth in their Software as a Service (SaaS) segment for the second quarter of 2024. The company's SaaS revenue saw a significant 25% year-over-year increase, reaching $77.8 million, largely due to a surge in subscribers and the successful transition of legacy clients to their SaaS platform. This also led to an impressive rise in Thryv's adjusted SaaS EBITDA, which exceeded 60% year-over-year, reaching $10 million.
These recent developments indicate a strong performance by the company, with a focus on enhancing Thryv AI capabilities and considering a freemium option for future product rollouts.
Thryv is also exploring mergers and acquisitions opportunities to strengthen its market position. The company expects its SaaS business to become a major revenue contributor, projecting that SaaS revenue will represent over 40% of their consolidated revenues in 2024 and more than 50% in 2025.
Analysts have noted the company's strong sales volume and growth in average revenue per user (ARPU), despite the challenging environment for businesses selling to small businesses. The full-year guidance for SaaS revenue is reiterated to be between $326 million and $329 million, with SaaS adjusted EBITDA increased to a range of $30 million to $32 million.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Craig-Hallum's positive outlook on Thryv Holdings, Inc. (NASDAQ:THRY). Despite the company's market cap of $619.69 million, Thryv's financial metrics reveal a complex picture that aligns with the analyst's assessment of a misunderstood growth story.
InvestingPro data shows that Thryv's revenue for the last twelve months as of Q2 2023 stood at $877.69 million, with a revenue growth of -16.96% over the same period. This decline in revenue supports the analyst's observation about the company's legacy Yellow Pages business. However, the gross profit margin of 64.44% suggests that Thryv maintains strong profitability on its sales, which could be attributed to its growing SaaS segment.
An InvestingPro Tip indicates that analysts anticipate a sales decline in the current year, which is consistent with the ongoing transition in Thryv's business model. Another InvestingPro Tip reveals that the company's liquid assets exceed short-term obligations, supporting the analyst's positive view on Thryv's improved financial health following its debt refinancing.
For investors seeking a deeper understanding of Thryv's potential, InvestingPro offers 6 additional tips that could provide valuable insights into the company's future prospects. These tips, along with real-time financial metrics, can help investors make more informed decisions about Thryv's stock.
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