As we have done in the past, we will briefly cover this week’s earnings results for longtime local industry player Thryv. The company announced on its Q3 earnings call that SaaS revenue growth was 41% versus Q3 2020. That is a pretty significant indicator that the company is gaining some momentum in its transition from a marketing services business to an SMB SaaS business. Investors applauded the results with Thryv holdings adding 11% value by the close of the market on Thursday.
As we identified in our review of the company’s Q2 results, the company is showing solid progress in growing SaaS ARPU. At the end of Q2, the company had seen ARPU go from $232 per month to $323 per month. For this last quarter, the company added on average another $17 per month or $323 to $340 per month. That puts ARPU at just under $4,100 per year.
The Modernization of the Local Economy
“We are experiencing the modernization of the local economy with SMBs beginning to embrace cloud technologies. And we see Thryv as leading the charge,” said Thryv CEO Joe Walsh in the earning release.
“This wave of adoption has propelled Thryv software to faster and faster growth. We are seeing improvements in customer engagement, average spend, and retention. These trends are delivering durable SaaS growth for Thryv. We are pleased to, once again, raise SaaS revenue guidance for 2021.”
The metrics Walsh highlights — engagement, spend, and retention — are the drivers of the impressive growth in ARPU. Not only is the company raising guidance for its SaaS business, but also for the traditional marketing services business.
A couple of other worthy notes about the earnings release. The company’s efforts to build out new sales channels appear to be paying off nicely. During Q3 2020, new channels delivered 10% of new revenue and 22% in the most recent quarter. What that suggests to us is that the new channels are delivering highly qualified customers that are likely to spend more sooner than those being acquired through traditional channels.
This is important because the only metric that lags, as it did in Q2, is the total number of SaaS customers. Over the last 12 months, that total has grown by just 1,100, or less than 100 per month. If, and presumably when, Thryv figures out this aspect of its SaaS business, there’s no telling how much higher investors will see their value increase.