Disclosures, go to williamblair.com. With that, it's my pleasure to introduce Joe Walsh, CEO of Thryv. Joe, thanks for coming. Thanks for having me. Yeah, of course. So I think we're gonna have some maybe just differing levels of familiarity with Thryv, with the business. So if you wanna start off with just a little bit of background into the business, when you got involved, how it's changed the customers you serve, what you do, and then we'll go from there. How does that sound? Sure. Be glad to. Yeah. All right. What's neat about this business, it's the old Yellow Pages. It's the, you know, 130-year-old Yellow Pages business that 10 years ago, myself and my team joined and pivoted the business to build a SaaS small business software offering. So our target customer is a very small business. These are 6, 7, 8, 10, 12 employee, really small businesses, mom-and-pops, and we give them a tool they can basically run their business on. It's their appointment calendar for the day, a client card with all the details of every business. It's their listings and all their social media management. It's estimates, invoices, billing, all the stuff on the back end, and then you can collect ratings and reviews and reputation. So that's at the core of it. It's like a little operating system. You don't need to be certified. You know, some of these fancy tools, you have to be certified, or you have to bring a consultant in. You can actually operate this yourself. It's pretty consumer grade. It's pretty simple. It sells for a few hundred a month. It's not a, not a hard buy for them to do. We have a really engaged customer base, low churn, you know, high retention, and we're now starting to roll out additional software centers, we call them, tools, that customers are beginning to add on, and so we're beginning to see growth from that initial investment to capture those, the big corpus of original customers. So it's kind of an exciting time- Yeah ... in the company right now. Yeah, it's, it's a very-- I think it's a fascinating story, just because there is the software side of the business, and you touched on the other side of the business, which is the legacy Yellow Pages business, and I think there's a whole bunch of, other services that you've been selling there as well. How have those two businesses kind of played together to help you accelerate the, the software side, and what role is that, that traditional business that Thryv was, you know, many, many years ago? It's truly been an unfair kind of advantage. If you were to start a software company, you'd have to go out and try to win customers, win a conversation. You know, we began with hundreds of thousands of small business relationships. Customers that have been with us for more than 15 years, and a sales force on average with a tenure of more than 10 years. So these are deep relationships, pretty much automatic conversations that you get to have. And these businesses are also subject to the same, you know, transition from, you know, doing stuff on paper to moving things into a more digital environment. And so we've just naturally been able to be a trusted advisor and help them along the way, and it's allowed us to build a nice big base of customers. We sometimes affectionately refer to that standing customer base as the zoo. We're kind of hunting in the zoo. The most recent product we just launched, Marketing Center, is much more adjacent to what they were buying, the advertising, marketing services stuff in the past for. We're seeing kind of an acceleration in that process. It's interesting, I think you've recently kind of made this, I don't want to say strategy shift, but you've certainly accelerated a strategy that was already in place, which is getting customers to transition from the legacy business to the software business, and it coincides with the release of Marketing Center and Command Center and some of your newer products. What made you... Like, why was now the right time to say: "Hey, we really wanna get customers to move over that haven't before?" And how are you even going about doing that now in a faster fashion than you were in the past? Well, what's neat about it is that the SaaS business is now profitable. Mm. The gross margins are very high of the various centers that we're selling. So if a customer and a dollar move from marketing services over to SaaS, it's okay. It moves over, and it's very similar, if not even slightly better. Whereas if that move had happened 3 or 4 years ago, it would have gone from rich profits to a loss-making business. It's now moving over. SaaS will be more than 50% of our revenue next year. We're right at about the crossover point, where it's becoming a majority SaaS business. So the timing is excellent for this, and the technology that drives Marketing Center and Command Center, we couldn't have done it 4 or 5 years ago. A couple of smarty investors asked me earlier: "Well, why didn't you do that initially, rather than starting with the CRM?" We just, we couldn't have. It's really sort of a very current technology that we're using. So I think the strategy, I think, right, makes sense, that you wanna you're able to now move them over with the same kind of economics, profitability, et cetera, or similar. As we start to think about just the execution of it, is it sales incentives that change? Is it? Do you start to deprioritize certain legacy products? Like, what, what does the mechanics of the transition look like, and how do you actually accelerate that internally inside the company? So yeah, the sales incentive change, you know, each year we will sort of incrementally turn the comp a little bit more SaaS-oriented each year. So, you know, emphasizing more SaaS and more SaaS productivity, and that's worked very well. Mechanically, the other thing that's happening is, in addition to the printed and online Yellow Pages, there's a bunch of other products and services in our marketing services, you know, group... some of those are areas that we're actually anxious to deprecate the technology that runs it. And so we've been beginning to kind of cohort migrate some of those customers into our brand-new, fresh, shiny platforms that do a lot more for them. So it's a win for the customer, and it's been a good thing for us as well. Yeah. It's, it's interesting, right? I think when I look at the kind of SMB space, and particularly the customers that, that you serve, where they can get a lot of, efficiency benefit from using, your, your software platform, what, what is it that's been thus far, maybe that surprised you or maybe that you've noticed as you've talked to your customers that are still using the legacy marketing services, that's kept them from transitioning to the, to the software side of the business? Has there been, like, a few things that kind of stick out as, "Oh, these are the roadblocks that we need to kind of knock down," or, "This is the reason these customers haven't been moving over," that you can now maybe affect that change? So a lot of our legacy customer base, these are the old line businesses in your town. So it's the funeral home that's been on the corner for five generations. It's the HVAC company that the grandson is now running it of the son. These are the old established businesses. They've been our customer for more than 15 years on average, and they do pretty well for just showing up, honestly. Yeah. Kind of they have it, "If it ain't broke, don't fix it." What shakes that up is when the 64-year-old leader in the business decides that they want to step away or slow down or whatever, and they're trying to convince the 38-year-old or the 41-year-old son, nephew, cousin, aunt, manager to step up and start to take a leadership role in the business. That next gen person says, "No, no, no, no. the dry erase board and the papers, the piles of papers, and, you know, I'm a digital native, I don't want to do that." And I've actually been on that sales call with both generations, where the dads are there going: "I don't know if we really need this," and the kid's going: "If you want me to do this, Dad, we have to do this." And they're having that generational transition. And that process is playing out across small businesses in America. Still today, most small businesses are controlled by the Baby Boomers, but that transition is really speeding up. Just look at the demographics of how old the middle of the Baby Boomers are. I think they're actually past 65 now. Mm-hmm. Yeah. Not that you would know, but yeah. So, does it, as you're like just thinking of your top of funnel, you're looking at the data that you see internally, does it feel like we're at a tipping point, or it's kind of just been a gradual progression of the journey? 'Cause you're making this change internally, and I assume you've seen some data as well that's maybe kind of supported that decision. Yeah, I, I think when I first met you, I said that I thought the transition from paper to the cloud for small businesses was in the top of the second inning. Remember, I told you that- Yeah ... a few years ago? Now I would say it's in the fourth inning. I'd say we're really well into it. Okay. The transition is playing out. It's we still see not a small number of unclouded, I call them, people that are coming from no system into our system for the first time, but it's less. Yeah. It's less than it used to be. Now they're coming up from some point solution or from some free Google tool or whatever, that they need something more robust. So we're definitely, it's. There's not some moment where it's accelerating, it's just a steady building. And when I look forward to the second half of this decade, 2025 to 2030, I can't imagine any of our customers won't be using these type of tools. Hopefully, ours, but even if it's not ours, they'll be using somebody's- Yeah ... if they're still in business. Okay. I want to switch gears a little bit to product and platform. And, you know, I just, like, as I think about the SMB software market, I think one of the real ways that SMB software businesses can be successful is they have a platform and they've productized on top of that. And we've started to see that strategy at Thryv play out, where you started with Business Center, then Marketing Center, then Command Center. Talk about just, like, how you've built-- Like, have you built all of that organically? Have you done M&A? Is it easy for you to launch solutions? 'Cause the product velocity seems to be increasing. Talk about some of, like, the architectural foundational decisions that you've made, that's made it easier to expand- Yeah ... the platform. I mean, you know, one of the really successful, which we like a lot, companies out there is HubSpot. We're a big HubSpot customer. HubSpot has hubs that serve various things, and if anybody's followed them, I mean, their growth actually accelerated as they got more and more hubs out there because they had the different cohorts throwing off faster and faster growth. And so, you know, that's a company we admire. We're like them, just serving a much smaller customer and a much, a much simpler world, but actually a much bigger addressable market. Mm. The number of businesses our size out there, their ICP is 2,000, ours is 20. Yeah. Maybe. So if you look at that and you think about the way this is playing out, you're right, we landed a whole bunch of customers on Business Center. We've now added Marketing Center. People are now coming in as Marketing Center customers and then adding Business Center. Mm. That's spun around the other way. Command Center is a free forever product, but that's a great product-led growth kind of onboarding funnel. Then we have another center coming out fairly soon, another one coming out next year, that will just give us kind of more opportunity to to grow with our customer, to have a little bit more revenue, you know, per customer, and completely serve their needs. They don't have to leave us. Yeah. As you're thinking about some of the newer, the newer products, I don't want, I don't wanna say jump the gun and give us your new, new centers that you're launching, but do you anticipate the newer solutions that you launch can be entry points like Marketing Center has now become? Or is it always gonna have to be, you know, the tip of the spear is always gonna have to be Business Center, and then customers expand from there. I guess, can they be standalone product suites for you? I think they'll be able to come in from different ways. I think it's already not the case that Business Center is the tip of the spear. I think it was until a couple of minutes ago- Mm. Like it's changed. I think Command Center and Marketing Center are easier on-ramps for people, and they're then adding Business Center, and I think that will probably be the case with some of the other centers we're adding as well. How does that? Mm ... as you think about your growth algorithm on the software side, does it mean as we're looking kind of over the next couple of years, that your ARPU expansion is gonna be the primary driver of growth as you're doing more cross-sell and multi-product sales? Or is it still gonna be the number of customers that are coming in? We see our ARPU going from just over $4,000 a year to, like, $7,000 a year over the next kind of 3, 4, 5 years. So we think there'll be a gradual rise in it as we sell multi-centers into these businesses. But that'll also be offset by huge numbers of new customers acquired, some of which will be coming in from the freemium motion, which actually might be a little bit of a lower price point, you know? Mm. If you take our free forever Command Center, and you start to really use the heck out of it, if you wanna add additional channels beyond what's free, there's a small upcharge for those extra channels. If you wanna add another seat or two past the 3 that we give you for free, there's a small upcharge for those extra seats. So people give us their credit card, they begin to spend, and then we will tickle them with in-app notifications to say, "You realize you have 100 contacts in the CRM you've been building in the background. You could send a marketing message. Click here to create a marketing message to send out to them." And there's an easy little kind of Mad Libs Jot form, kind of easy thing you kind of build out, and then you, when you hit Send, it says, "Wait, you need to upgrade- Mm. Because you need one of our other tools to do that. So we're in the very nascent, very, very beginning, but we think that there'll be a big flow of product-led growth coming in from that angle going forward as people kind of grow up from the free. Is it? I know it's still early on Command Center, as you said, but what have you seen thus far? Has it kind of in line with expectations, has it exceeded expectations, relative to what you thought, you know, when you launched it? Are you seeing that top of funnel come in and drive interest and discoverability for Thryv? You know, it's V1- Yeah. Right? Whenever you've been around this stuff a lot. Yeah. V1, as the inventor, you're always disappointed- Yeah, -because there's a few things that don't work like you'd hoped, and, true to form, we're there. It is, it is getting a lot of downloads, it's getting a lot of traction. It's too early for me to really take you through a, "This many downloaded for free, and then this many persistently use it, and then this many then upgrade, and this..." It just, it's just too early. Okay. I'm really confident that... V2 is about to come out. I'm really confident that over the next, you know, couple of years, that we'll get that motion figured out well before we run out, run out of zoo creatures to go shoot. Yeah. What, you know, one of the things I think we look at pretty closely in the small business market is just how sensitive some of the companies are to to the economy, right? To the macro. And it seems like there's been a little bit more shakiness at least from what I've observed externally, but I'd be very curious to hear what you're seeing in your base, 'cause I think you do serve a different segment of the SMB market. So maybe talk about how your customers are reacting to, you know, some of the headlines that we see about the macro here. Yeah, I'm not a great person to ask about the macro because our customers do the nasty things. When something breaks, they fix it. So we don't have any fine dining, no high-end retail, nothing discretionary. Your tooth breaks, and you have to go to the dentist. Mm. Or you walk in the house, and it's 95 degrees 'cause the air conditioner's broken, and it's the middle of summer. You're gonna call somebody, and you're gonna get it fixed. Or, you know, somebody rear-ends your car, you're not gonna drive around with a dented car. You're gonna take it to the body shop, you're gonna get it sorted out. So our people do all the services, all the necessary things, and their businesses don't really stop. They kind of keep chugging along. And so we saw that really over the last periods as we went through the pandemic and everything else, everybody just kind of kept moving forward. So our guys whine, you know, 'cause they read the headlines- Mm ... and they complain about hiring, you know, people. When the supply chain hit, we heard about how it takes a year to get a Sub-Zero, and we heard lots of whining, but they kept buying, and they kept spending, and they've been very resilient. So we're fortunate. We really don't have very many new starts. The vast majority of our base, about half of all of our customers come from our existing customer base moving over, and then the next about a third come from referrals from them- Mm ... which tend to be just like them. And then less than 20% come in through our inbound motion, which is our most expensive lead and would be our churnier. Mm. We can't control who they are. They could be a new start. Yeah. But that's a pretty small group for us. Just as you're thinking about that go-to-market, where do you think about, like, investing in go-to-market and sales over the next 2-3 years? Like, is the inbound channel something you want to refine and build out, or is there right now so much opportunity in the install base that you're kind of saying, "Oh, we don't need to necessarily prioritize this at the moment?" Like, how do you think about go-to-market evolution overall? Yeah. Make no mistake, we have a golden goose- Yeah ... in the kind of hunting in the zoo. And we have roughly 350,000 customers. We aren't even a quarter of the way. We have a long way to go through that base, so this will last for a long time. There's a long runway. I'd say our next priority is product-led growth, and we're almost four years into building and working on that, and we genuinely believe that will be a big area for us. We think that we can give real, tangible value for no money to lots and lots of businesses, that will then become good candidates when they're ready to move on to the next step. That would be next. I think, you know, after that, there are some opportunities that we haven't fully leveraged. Working through partnerships and channels is something that we've dabbled in, but not really done that much. Now that we have Command Center and the ability to give something really valuable for free to your customer base, there's much more of an opportunity for us to do some partnerships. So I think we're gonna lean into that a little bit more going forward. You know, obviously, our local sales channel is what's bringing home the bacon. We have yet to expand that. We've mostly been shrinking it. Yeah. We've been doing that to variabilize the cost for marketing services, but now that we're at this inflection point, we could actually expand that. Hmm. That's not a lever that we've done yet. We haven't expanded that- Yeah ... but we could. Interesting. So another part of that is international, right? 'Cause you've made some acquisitions to expand into other geographies outside of the U.S. I think Canada is one, Australia, New Zealand is another one. So talk about where you are in international expansion and how those, how that M&A that you've done is playing out, and what kind of a growth lever you expect that to be. Yeah, Australia is, we're three years in now. We bought it three years ago. It's now cranking. Yeah. It's growing very, very fast. The brand is strong. The Thryv brand is very strong there. Engagement usage is good, churn is low. And we, after a couple of years of investing to get it going, it's now returning, you know, positive returns. New Zealand is much smaller, but since it's tucked in with Australia, it'll, it will probably come along a little faster just because it's kind of riding on the back of the success in Australia. Canada is interesting because we didn't make an acquisition there. We went in greenfield, and so there's necessarily a little bit more investment to get it going- Mm ... but you don't have the big purchase price either on the front end. Yeah. But it's coming along well. It's just early. It's just kind of in the second year, and we have designs on going to other places as well. Would you run go-to-market and sales for those geographies locally out of the U.S., or you build something in those geographies? How do you handle the go-to-market aspect there? For the first year or so, we put a dedicated, you know, Canada-only effort with dedicated leadership and whatever, and there were lots of good reasons to do that, and there were benefits. We fairly recently just sort of tucked it into the nearby stuff in the U.S., and that's worked out pretty well. It's been a whole another leg of learning for them, like, you know, best practices, working with people that. Their problems were pretty different when they were starting. They're not as different now that they've been at it for a little while. Yeah. There's, like, a second lift that we've gotten out of that. Okay. Maybe switching gears a little bit to your ideal customer profile, and how your unit economics have changed. 'Cause I think if I look back at, like, the last few years that you've been public, I think there's been some variability and then some improvements in churn rates and how you focused which type of customer you're going after. So talk about now, like, where your focus is from an ideal customer profile, even within your kind of hunting-in-the-zoo analogy. Like, what is the customer size? What are the verticals that you're focused on, where you really see the growth opportunity right now? Yeah. What, what you're referring to is, for those of you that have been following the story for a while, we experimented about five or so years ago with a lower priced kind of down-market product to try to just get sort of mass numbers of customers. And what we found was when we went downmarket in price and downmarket to newer, smaller businesses, the churn wasn't worth the price of admission. We ended up with, you know, churn that was more than double what we have in the higher group. So we, you know, cut that off and phased that out, and it's completely... that mouse is out of the snake now. Yeah. Even within our base, we're trying to move a little bit upmarket. So this is like moving from five-employee businesses to 10. Mm. You know, still really small, but moving a little bit upmarket. Because we find if they have a little bit more revenue, they have a few more people that don't actually nail the shingles on, that work in the company, that they tend to be better, more persistent users of the software, and their needs are a little bit more sophisticated. They want to do marketing automation campaigns and some of the things that our tool provides, so, a little bit upmarket. In terms of verticals, our strongest vertical is everything home services. Mm. Everything from, you know, painting guys, roofing guys, you know, landscapers and fence people, everything to do with your house. The next couple, you know, big areas for us are allied health of every kind- Mm ... from, you know, chiropractors and dentists to the laser vein guy, you know, just health counselors of all kinds of various sorts. Legal is very strong. If you guys have ever opened a Yellow Pages, you know it's filled with lawyers. Mm. So thousands of those are also, you know, Thryv software customers as well. And then weirdly from there, pets boomed like crazy during the pandemic. Everybody went out and got a pet. Interesting. The whole pet category is really strong, and we have so much pet stuff, from groomers to walkers, to trainers, to all the stuff around pets. Interesting. I'm a dog person- Ah, well- That's okay with me. I would not have expected that. Yeah. From a product perspective, then, are you also verticalizing your software capabilities to each of these verticals, or maybe the main verticals that where you see growth opportunity and, top of funnel building? Like, how do you cater to some of these customers from a product perspective? Yes and no. The answer is yes, we are trying to, and yes, we should. We haven't done as much as we could have or should have. I think there's more opportunity there, for us to go deeper there. A lot of it, the actual stuff it does is similar in all these different businesses. It's really the taxonomy. When you open it up and the drop-down menu knows that you're a roofer, so it talks about different kinds of shingles and different kinds of gutters and it doesn't, if you're in a medical area, it refers to them as patients and not customers. It's a lot of it's simple things like that that make it feel at home. So all of that's been done, but there's more that we can do and more that we should do. I wanna be clear, it's not just those verticals. I just yesterday had a wonderful conversation with a guy that does tattoos and body piercing in New York City. This guy's got a going business. He's been with us for about 12 or 13 years. Started out as a Yellow Pages customer and then bought digital stuff, and then bought the software, now buys the whole mac daddy, everything from us. And you know, he's got a database of all the people he's ever pierced or done ink on or whatever, that he can do you know basically drip campaigns out to. Mm. And guess what? They go back and they get more stuff done. So it's an unbelievable, you know, customer base for him and an unbelievable market. But he runs search campaigns with us. We do SEO for him. We run his website for him, all the web chat features, and he uses virtually everything in Thryv. He does. He uses ThryvPay, he uses the reminders for appointments, he manages all of his social media and his listings everywhere. He follows up for reviews, everything, the whole 360. So when you... It's really interesting, right? Like that example, because when you look at your customer base, I imagine there's a lot of customers that are using you for a portion of all the functionality that you offer, and they're getting some value out of the product, but they're not getting as much as they could. How, like, how penetrated are you, even in the customers that have moved over to the software side? Because you have 40-some thousand SaaS customers, but maybe there's even- Yeah ... yeah, more, more room to grow even within those. So what we find is that when they use three of the features- Yep ... they don't leave. Mm. When they use four, five, six, then they just, they really are a power user. So this gentleman was using, like, more than a dozen. Yeah. He was using everything. But it is a problem sometimes where they, when we meet with them, a lot of times a very simple question we'll ask them while we're just getting to know them is, "You know, about your business, what sort of wakes you up at 3:00 A.M., and you're sitting there worried about it or thinking about it?" The answers you get are interesting. They'll say, "Well, I haven't had dinner with my wife in three months." You know, well, Thryv saves the average of our customers around 20 hours a week. And you might say, "Well, how could one person save? That's assuming multiple users." Saves one user about eight hours a week, but we can save them about 20 hours a week. So we share that stat with them and explain: "Let me tell you some stories about some other customers and the time they've gotten back, and they've gotten control over their kind of disorganized lives. It makes a big difference." Sometimes they'll say to you, "Well, I hate how much I have to give the credit card companies to clear payments." And so that becomes the entry where we ThryvPay is how we begin. Other times, they talk about wasting time, driving all over town for appointments where they get stood up. And we say: Well, do you have an automated appointment confirmation process? And the answer is almost always no. We say, "Well, what if we could put that in? Our other customers have told us it cuts no-shows way down when you remind them the day before and then, like, an hour before. They often will call you and say, 'I had an emergency, I can't do it,' and it saves you driving 25 minutes across town." So we try to work from their number one problem. "This is what I'm the most worried about," and we go right at that and get that solved. Mm. And then we sort of start working out from there and branching out from there. And that often leads us to using one or two features really committedly, with lots of scope to grow more. Yeah. Okay, very interesting. In the few minutes that we have left... Oh, there we go. We got some time. Your CFO, Paul, is not here, but you're here, so I'm gonna have to ask you the question. There is, as we're going through this transition, right, of legacy marketing services to SaaS, I think the legacy business was very high margin. The SaaS business is getting there, but as that melting ice cube maybe melts a little bit quicker, how do you maintain the margins and the cash generation in that business? 'Cause that was a very profitable side of Thryv. ... Well, we prefer to think of our melting as an iceberg, not an ice cube. There we go. You know, it's- Yeah. Pretty substantial. Just, just to straighten you out there. Yeah. The gross margins of our SaaS centers are equal to or better than the stuff over in marketing services. What it was lacking was scale. It needed to get bigger, so it could scale up and we're there now. You know, we'll be over 40% of our revenue this year will come from SaaS, and as we go into next year, it'll eclipse 50%. We'll be by around this time next year, we'll be majority SaaS. So I'm completely comfortable with that, those dollars as they move over, they will move over in a margin-rich way and continue to be cash available for, you know, debt repayment or whatever we need to do with it. Let's talk about that as the last piece, and then we'll call it. You had recently refinanced your debt. Talk about what that means for the business, how you can invest now, think longer term, and what flexibility this refinance gives you. Yeah, so we incurred... Or we, we recapped this debt when we bought Australia. We had some debt, we rolled it over and did it, and we've had no problem paying it back, but the terms of the debt essentially swept all of our cash. So any available cash just got swept. So not some of it, not-- but all of it, all of our cash went away. So in the last three years, Cameron, we paid down about $350 million, which is the total balance that we have now in, in the last three years. So imagine paying $350 million out of a growing business, you know, it pays-- pretty much takes all of your money away. So the new debt that we have both has a lower rate to it- Mm. which is great, but it also leaves us with some of our own cash. So as the months and quarters go by, we'll begin to actually create a little bit of a cash, a snowball, that we'll be able to potentially use, either to step up our investment and expansion or step up our investment in product, or potentially for a tuck-in acquisition, maybe. We'll have some flexibility, of which we've had virtually none. Yeah. Okay. All right. Very helpful. Thank you, Joe. That was great. Appreciate you joining us. Thanks, everyone.