We came across a bullish thesis on Thryv Holdings, Inc. (NASDAQ:THRY) on Substack by LittleBarnSparrow. In this article, we will summarize the bulls’ thesis on THRY. Thryv Holdings, Inc. (NASDAQ:THRY)’s share was trading at $14.96 as of Jan 6th. THRY’s trailing P/E was 15.31 according to Yahoo Finance.
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Thryv Holdings stands out as a compelling investment opportunity, combining a legacy Yellow Pages business with a rapidly growing SaaS platform for small and medium-sized businesses (SMBs). Emerging from Dex Media’s acquisition of YP Holdings in 2017, the company has undergone a remarkable transformation under the leadership of CEO Joe Walsh, pivoting from a declining print-based marketing model to a digital-first SaaS enterprise. This shift has allowed Thryv to leverage its established customer relationships to transition SMBs into modern, integrated digital solutions, positioning it as an essential partner for businesses navigating an increasingly digital economy. Despite the structural decline in its legacy business, Thryv’s SaaS trajectory highlights significant potential for operational leverage and valuation expansion.
The SaaS segment, which now drives the company’s growth, is tailored to meet SMBs’ evolving needs through three primary offerings: Business (CRM tools), Marketing (lead generation and campaign management), and Command (a communication hub). Thryv has strategically shifted its focus from CRM to marketing solutions, aligning naturally with its legacy customer base and enabling it to offer higher-value services with improved retention and profitability. The introduction of the “freemium” Command Center has further strengthened its go-to-market strategy, serving as a gateway to attract new users, foster relationships, and drive upselling. This deliberate move to prioritize ARPU and client quality over sheer customer count has reinforced the company’s profitability and growth outlook.
Financially, Thryv’s SaaS business is robust, achieving a 25% annual revenue growth rate and maintaining EBITDA margins of 11–12%, with expectations of further expansion as the segment scales. While the legacy Yellow Pages business continues to decline, it remains a cost-effective channel for acquiring SaaS clients, allowing Thryv to capitalize on its strong SMB relationships and maintain low customer acquisition costs (CAC). The company’s efficient SG&A management and operational focus support its medium-term goal of achieving 20%+ EBITDA margins. Operating within a large total addressable market (TAM) of 4 million SMBs in the U.S. and 8 million globally, Thryv has a long runway for growth, underpinned by its unique position in a fragmented and competitive market.
Thryv’s valuation adds to its attractiveness, with the company trading at close to 1x revenue, significantly below SaaS peers. This discount provides a favorable entry point for investors seeking exposure to a profitable and growing SaaS platform with a solid foundation in the SMB market. While its debt burden presents a risk, Thryv’s management has demonstrated a strong commitment to deleveraging, successfully reducing debt, refinancing at lower rates, and cutting interest payments. These efforts, combined with its SaaS-driven transformation, position the company for a valuation reset and long-term growth.
The recent acquisition of KEAP, a SaaS provider specializing in email marketing, CRM, and e-commerce solutions for small businesses, underscores Thryv’s strategic vision. Acquired at an attractive valuation of approximately 1x sales, KEAP enhances Thryv’s offerings and expands its European footprint. Management estimates $10 million in integration efficiencies, further supporting the deal’s rationale. While the acquisition sparked controversy due to the decision to issue shares at a discounted $14 per share, below the trading price of $18, this financing approach allowed Thryv to secure the deal without overextending its balance sheet. Though dilutive in the short term, the acquisition reflects a calculated risk that aligns with the company’s growth ambitions and could drive significant long-term value through synergies and cross-selling opportunities.
Thryv’s leadership under Joe Walsh has been instrumental in its transformation, guiding the company from a debt-laden legacy business to a SaaS-focused enterprise. Walsh’s experience and strategic vision have enabled Thryv to navigate challenges, maintain financial discipline, and consistently execute on its growth strategy. However, concerns around transparency, particularly regarding reduced reporting on international operations and granular SaaS metrics, remain a point of contention for investors. Addressing these issues could enhance confidence in management and further support the company’s valuation.
Despite these challenges, Thryv’s low valuation relative to peers like Salesforce and HubSpot underscores its significant upside potential. Trading at approximately 1x market cap to sales, or 1.5–2x EV/Sales when factoring in its declining debt, Thryv offers a unique blend of growth and value. The KEAP acquisition, while controversial, exemplifies the company’s forward-thinking approach and commitment to scaling its SaaS capabilities. As deleveraging progresses and the SaaS transformation matures, Thryv is well-positioned to capitalize on SMBs’ increasing adoption of digital solutions, making it an intriguing prospect for investors seeking growth and operational improvement.
Thryv Holdings, Inc. (NASDAQ:THRY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held THRY at the end of the third quarter which was 18 in the previous quarter. While we acknowledge the risk and potential of THRY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than THRY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.