At its Investor Day on April 5, software and marketing services company Thryv Holdings, Inc. (NASDAQ: THRY) announced its Software as a service (SaaS) revenue target for the next 10 years.
Based out of Texas, Thryv provides digital marketing solutions and cloud-based tools to small and mid-sized businesses (SMB) in the U.S. and Australia to help them grow and modernize their operations.
The company operates under three business segments – Thryv International, Marketing Services and SaaS. The Thryv International segment provides digital marketing and directory services in Australia.
The Marketing Services segment provides print and digital solutions, including print yellow pages, internet yellow pages (yellowpages.com, superpages.com, and dexknows.com), search engine marketing solutions, and digital media solutions like online display and social advertising, online presence, and other video and SEO tools.
The SaaS segment provides Thryv, which is an SMB-focused end-to-end customer experience platform that also includes ThryvPay, a payment solution that allows users to get paid through credit cards and ACH (Automated Clearing House) transactions.
Thryv SaaS platform is used by over 46,000 businesses. Further, the company manages the digital and print presence of more than 400,000 businesses.
Highlights of the Day
At its investors’ meet, Thryv said that it was aiming for SaaS revenue to total $1 billion by 2027 and $4 billion by 2032. It also reiterated the guidance for the first quarter and full-year 2022.
Joe Walsh, the Chairman and CEO at Thryv, said, “This is the decade that local, independent small businesses automate their operations and follow enterprises into the cloud. We put their office in their pocket so they can run their business from anywhere. And what’s exciting is that there are 10 times more small businesses than there are larger enterprises.”
Needham analyst Scott Berg attended the investors’ meeting and returned impressed by the company’s growth outlook and product strategy.
Let’s have a look at what he has to say.
Analyst’s Opinion
Berg said the SaaS revenue targets represent a five and 10-year CAGR (compounded annual growth rate) of 37% and 34.5%, respectively, over full-year 2022 guidance.
“These targets represent a notable step up from the medium and long term targets the company originally gave around the time of its IPO of $250 million to $300 million and over $500 million, respectively. We note these targets are organic growth assumptions and do not include any impact from additional acquisitions,” the analyst said.
The analyst added that the growth is likely to be driven by increased cloud adoption as SMBs “move away from manual processes and towards cloud platforms to more efficiently manage and grow their businesses.”
The analyst believes Thryv SaaS business is in its niche stage and has substantial international expansion opportunities. This is in line with the company’s view that it can serve up to eight million customers internationally in addition to four million potential domestic customers.
“The company is initially focused on driving growth in Australia and Canada, and we could see the company expanding into the U.K. and Europe over time,” Berg said.
Price Target
The analyst has a Buy rating on the stock with a price target of $42 (45.5% upside potential).
Overall, the stock has a Strong Buy consensus rating based on four unanimous Buys. THRY’s average price target of $43.33 implies 50.1% upside potential.
Takeaway
Even though Berg is bullish on the stock, he plans to pay close attention to how Thryv executes its growth strategy. He believes the company has “one of the most attractive risk/reward profiles over both the near and long term.”
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