On Wednesday, Needham & Company maintained a positive outlook on Thryv Holdings, Inc. (NASDAQ:THRY), reiterating a Buy rating and a price target of $28.00. The firm's optimism grew following attendance at Thryv's Analyst Day, where the company's growth prospects and financial strategy were presented.
The event bolstered confidence in Thryv's transition from a market-perceived trading vehicle to a solid long-term investment. Needham highlighted the company's customer penetration strategy, which is expected to be supported by the introduction of two new Centers and the integration of Keap's Automations. InvestingPro analysis reveals that while analysts anticipate a sales decline this year, they expect the company to return to profitability.
Thryv has projected nearly $600 million in cumulative Free Cash Flow (FCF) generation through the fiscal year 2030, which is seen as a substantial buffer against its current net debt of $290 million. This forecast is key to alleviating concerns about the company's balance sheet, which had previously been viewed as a potential issue. The company maintains a current ratio of 1.04, indicating adequate liquidity to meet short-term obligations.
The financial firm noted that with the balance sheet concerns addressed and a clearer understanding of Thryv's growth drivers, the stock is currently very appealing. Thryv's valuation stands at approximately 2 times Software (ETR:SOWGn) as a Service (SaaS) revenues, which is considered attractive for a company with a durable, profitable growth trajectory exceeding 20%. According to InvestingPro's Fair Value model, the stock is currently fairly valued.
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In other recent news, Thryv Holdings, Inc. reported significant growth in its SaaS segment, with a 29% year-over-year increase in Annual Recurring Revenue (ARR) reaching $350 million. The company's third-quarter results also highlighted a 45% increase in SaaS subscribers, now totaling 96,000. However, the Average Revenue Per User (ARPU) experienced a temporary decline to $307 due to new customer introductory rates.
Among recent developments, Thryv announced the acquisition of Keap, expected to enhance their offerings and contribute to revenue growth. The company's full-year SaaS revenue guidance was raised to between $329.5 million and $331.5 million. The Keap acquisition is projected to add $11 million to $12 million in Q4 revenue. As part of its long-term growth strategy, Thryv anticipates leveraging the Keap integration to drive revenue growth and improve gross margins.
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