All right. Welcome everyone to the Thryv Investor and Analyst Day. My name is Cameron Lessard. I'm Head of IR here at Thryv. Before we get started, I wanna touch on a few agenda and housekeeping items. First, please note our safe harbor statement. We've also put out a press release this morning, so feel free to check that out as well. Let's talk about the agenda. You should walk away today with a comprehensive understanding of our vision, our product strategy, our client journey, and our financial performance. I'll wrap up here in a second and bring on Joe here to the stage, but he's gonna kick things off really talk about our vision, what you should expect from us in the next five to 10 years.
After that, we're gonna bring on Ryan Cantor, our Chief Product Officer, who's gonna talk about our product roadmap and how that will pave the way for continued growth and expansion into the future. We also have some really exciting news to share with you on that front. Next, we'll bring on Grant Freeman, our Chief Customer Officer. He's gonna talk to you about our client journey. He's gonna talk about how we engage with our clients, and we grow with them over time. In our final section today, Paul Rouse, our Chief Financial Officer, is gonna come up here and give you a financial overview of the company. KJ Christopher will join. He'll talk to you about our capital allocation strategy and our history with M&A. Let's move on to housekeeping.
We're gonna do this in about two hours, so we're gonna go right through. We're not taking any breaks, so if you need to step outside, get a cup of coffee, feel free to do so. Q&A will be. We'll be taking questions throughout the presentation today. We have a few short windows, about five minutes. We wanna really stick to that after each presenter, and then we'll have a Q&A session with all the presenters at the very end of the presentation. You can submit your questions online at investorday.thryv.com. That should be it. I think, real quickly, if you could just silence your computers, all your devices, that'd be really nice. All right. I'm really excited about this. It's my pleasure and honor to welcome our CEO and Chairman, Joe Walsh.
Thank you, Cameron. Well, thank you all very much for coming today. We really appreciate it. We're so excited to be together in person finally and get a chance to meet in person many of you that we've gotten to know over Zoom over the last period of time. Today, we're gonna share with you our vision of how we see the small business market unfolding as it relates to moving to the cloud over the next period of time. We're gonna share with you the role that we think that we can play in leading that. We think we can build a very important business here and really be a category leader.
We're gonna share with you enough about our background and our past to help you understand why we think we're qualified, you know, to do that and be a part of that. We've got a nice agenda today. We'll kind of walk you through how we see that market unfolding and we're gonna talk about our targets. We're gonna talk about how we believe we can get there. I'd like to start by just talking to you a little bit about my background personally. I'm an entrepreneur. I started a Yellow Pages company competing with the telephone company Yellow Pages before that was a cool thing to do.
I, you know, bootstrapped it basically with my own money and ran up and down the street calling on small businesses 12 hours a day, every day, trying to make payroll by Friday and build this business up. Back to you know, this goes back decades. Back to the very beginning of my career, it was walking up and down the street, talking to the plumber, the locksmith, the landscaper, the lawyer, the, you know, the pet shop, the bicycle shop, store after store after store. Really understanding their business, understanding their problems. They supported me enough that I was able to build a successful business, and I was able to sell it to a bigger company. I spent a couple of years there building that business, acquiring other companies, and then we ultimately sold it.
I joined a company in Long Island called Yellow Book USA. It was a little community telephone directory publisher, about $20 million in revenue. Paul Rouse, our CFO, and I joined within two weeks of each other. He was before me, he likes to point out. We were fortunate enough in a 24-year run together to take that $20 million community telephone directory publisher and build into a $2 billion company in the United States by launching into more than 250 new markets, greenfield, market after market, including some really big NFL cities, and making 77 acquisitions. Big platforms and little tuck-ins. Basically, we were doing one about every six or eight weeks over a very long period of time.
We were very blessed to have a lot of private equity backers and a lot of investors as we sort of changed out our investor base every few years, you know, make a lot of money on that run. It was an incredible ride. Ultimately, we took the company public on the London Stock Exchange. It was a $4 billion global company, and I eventually exited and started a board advisory practice, working with private equity firms and hedge funds that knew about us that had made money in our run who had troubled companies who were looking for help. That led me to Cambium Learning Group. I was executive chairman of Cambium, and it was a company struggling with the transition from paper textbooks and printed materials to digital.
Very similar really to the Yellow Pages business that I had just been working in. We managed to take that company from. It was a public company. The ticker symbol was ABCD. Take that company from about $0.70 a share at the time I took over as executive chairman to $14.50 a share we exited when Veritas bought the company in December of 2018. Some of you guys have mentioned that you were investors along the way in that, and I appreciate you following us here. That for me was a master class in recurring revenue and what we today call SaaS. In the education business, they don't really call it SaaS, but yeah, we were selling subscriptions to EdTech products in 43 countries around the world, for students.
We made a big difference in a lot of kids' lives, and we built a really valuable company. Along the way, I was still doing the board advisory gig and was contacted by the leadership and ownership of Dex Media, which was the old Superpages business and Dex One that had recently merged. They said, "Would you help us with a strategy? Help us figure out what to do with this business going forward.
Because, you know, we see decline in the directory business, and we sort of are reselling for Google and Facebook, but we really don't know where we're going with this thing." The suggestion that we made after doing a lot of work was that this thing was in the process of changing the world and that enterprises, this is in 2014, enterprises were rushing to move their computing operations into the cloud, but small businesses had not done anything yet in terms of a move to the cloud. There would be a coming enormous wave. It would be 10 times bigger than the wave of enterprises moving to the cloud that small businesses would move to the cloud.
A company as big as that company was, it was a couple billion-dollar business, with that big of a sales force, that big of a customer base, that much resource, could pivot and lead that change, lead that transformation. They really liked the strategy and asked us to join the company and actually execute the strategy. Seven and a half years ago, I joined with nine of my senior guys. We basically suspended Walsh Partners and came in and took this mission on. The company had nearly 5,000 employees at the time. We sort of turned around and recruited about 100 of our best guys that had been with us in the prior life. It was 100 on 5,000, and off we went to try to transform this. I'm really proud today.
You're gonna meet a few of the guys. You'll certainly meet Paul Rouse, my CFO. You're gonna meet Ryan Cantor, who also came with us from a prior life, who's our Head of Product. You're gonna meet Grant Freeman, who's our Chief Customer Officer. There are a number of other people here in the room. Gordon Henry is here. Our senior management team are peopled with people with leaders that have been together for years, managing tough on the cost side of the business and really focusing on customers, focusing on clients. I'm really proud of our team and what we've been able to do, and I think we're really qualified to make this happen. We're a team that's really fiercely devoted to independent local businesses, and that's what we've kind of built our careers on and our chops.
I talk to customers every single week, whether it's a Zoom or a phone call, spend some time talking to customers, make sure that that's in my mind what they like, what they don't like, what they're thinking about. You know, we really believe that in America, it's free enterprise, right? That's what this is all about. The American dream is owning a business. You know, we're devoted to really helping them be successful as they build those businesses. You know, we really think that consumers should have choices in their little town or their village other than just Panera and, you know, Starbucks and, you know, chains. They ought to be able to have true independent local businesses. They're the fabric of America. They're really the backbone of our country. We have focused on them.
Honestly, Starbucks is probably not buying anything from us. You know, we're working with the local independent business owners. They're our customers, the ones that we really know. We think that devotion to these folks, to these independent businesses is a worthy and a noble calling. We spend a lot of time with new employees that join us, sharing our thoughts about this. We find that with a high percentage of the people we're interviewing and that we're talking to, it really resonates. You know, they're able to picture the local businesses in their town that had sponsored their softball team or their soccer club, or they, you know, that when they go to the Fourth of July parade, that are there, and they kind of get behind this.
I can tell you honestly that the 2,700 people that work for our company are on a mission. They don't work for a company. They don't get a paycheck every two weeks and that's it. There's a mission. There's a zeal about what we do. You've met some of our people maybe out there giving demos today. They care a lot about this. When customers call us, we're there for them, and we really genuinely help them. I think that's part of why some of the statistics that we're delivering as a business are so outstanding because of the fabric of the people and the way they feel about what we're trying to do here. You know, SMBs matter to us. Let me get on with this conversation.
Again, the 2010s was the decade where there was a big move out of data centers, moving computing into the cloud. We saw that happening. It's still going on, I realize, but the big money got made, the big businesses got created during that period. We really believe that this decade, the one we're in now, is the decade where small businesses are gonna migrate to the cloud, and it's just beginning to happen now. We were early. You know, we started, you know, in 2014 with this vision, and we're out there telling the story, and people thought it made a lot of sense, but they just weren't ready to modernize and make that big of a jump. Today, it's happening. Today, we see it. We feel it every day. Why is it happening? Well, consumers are trained.
We're used to now, when we get on the plane, we swipe the little thing, and we walk on. You know, we're used to pushing a button, watching a little car drive to us. We get in it, and we drive away. You know, we've had these experiences with big companies. We've had it with global e-commerce. We've had these successes, and we kind of sort of expect that. It's table stakes. Even though we know we're dealing with a small, independent local business, we'd kinda like for them to be able to deliver these level services too. Businesses that don't are at a disadvantage.
We did a recent payments study looking at how consumers like to pay. Big surprise, they said we really would actually if we were looking at two businesses, and one we could do business with digitally and pay digitally and get a receipt digitally, if all things being equal, we'd go to that one because that's how we prefer. We feel more comfort when we buy high-ticket services if we can pay digitally as opposed to with a check. We feel like maybe there's a little protection there, a little bit more control. It's just how they feel. We think the small businesses are ready. You know, most of the small businesses that we work with are long-established. We have 400,000 customers. Been around for a while, most of them. These aren't usually new started companies.
They're often run by people who are a little later in their career. They weren't necessarily the early adopters, the first ones to jump in and be ready for technology. Now we're seeing it. We're seeing maybe it was the pandemic, whatever it was, we're seeing them more ready now than they have been before. The tools are way better. The interoperability is way better. The actual devices that we're working on have better, bigger screens. They're faster, they have better memory. The cloud's better, whether it's 5G or whatever, you can get access to stuff better. It's the time is now. You will see whether we lead it or not, whether we succeed or not, you will see a mega-trend over the next decade of small businesses migrating into the cloud. It's gonna be big.
There will be a lot of money made, a lot of big businesses built on that, and that's what we're focused on. This SaaS adoption study, we just did it in Q1, looking at where is the market in terms of its development. I've talked to many of you about the fact that we primarily have worked with the unclouded, meaning small businesses that, you know, were working on email and spreadsheets, and we were moving them into the cloud. Well, the way they started was not buying a big, powerful solution like Thryv. They started with point solutions, buying maybe, you know, a little loyalty tool or working with payments, or maybe they took their QuickBooks off the desktop and put it in the cloud. You know, something that was a little small like that.
Now, after the sticky notes are all over their computer and they're trying to log in and out of all these tools, they're asking the question, "Couldn't there be one thing that would do this? A little bit like salesforce.com is for big companies, couldn't there be something that was the main platform I could live in?" People are actually searching for that and looking for that now. If you go to the review sites, you know, G2 Crowd or Capterra or whatever, you'll see that's why people love us, because of the completeness of what we're doing. When asked, "Who would you wanna buy this from?" They'd like to buy it from one provider. We were early, but the market's coming our way now. We're like a surfboard on a wave, and it's just building behind us and getting ready to take off.
That's part of the. We feel it every day. We see it in our web traffic. Just to thryv.com, if you look at the rate at which the traffic is growing, it's growing really fast. We view that as a forward indicator for what's happening in our company. Now I wanna dive in and talk about our marketing services business. In a lot of the conversations that we have with many of the investors individually, we pretty much spend the entire time talking about the SaaS business, and we don't really give any time to marketing services. Today, since it's our time, and we paid for it, and we bought the bagels, we're gonna actually talk a little bit about marketing services, how we see that business unfolding. We're gonna give you our ten-year view.
Now, some of you have analysts in the back saying, "What, 10 years? I mean, the Yellow Pages business won't be around, but I've got it modeled to be gone in 30 months or 36 months." That's not how this is gonna play out. Not at all. I wanna, I just wanna walk you through kind of how we see it. This is our business this year, the mix between the printed Yellow Pages depicted here in yellow and the other digital marketing services that we provide. It's print is roughly 60% of our revenue. It's about half a billion dollars of revenue. It is in a long-term, slow structural decline, but it's been declining at very similar rates for a really long time. I'm gonna show you that data in a minute.
What we're gonna do here is just basically tell you how we see that in 10 years, how we see that unfolding. We think that print will still be around. It'll be pretty small, but still be a small part of our revenue 10 years from now. As the market plays out, as it unfolds, we think that we will still have a $100+ million business with 35% margins. We think we can variabilize all the costs within it. Actually, the fastest declining piece of our marketing services is print. As it gets to be a smaller part of the puzzle, you know, the declines may actually ameliorate a little bit, although we've been very gloomy with the way we've modeled it here. This assumes completely organic. There are no acquisitions in this. That's how we see that business playing out over time.
This is the usage trends for Yellow Pages. The online directories have taken over now over a period of years, actually deliver more total references than print. The decline curve has been about a mid-single-digit decline, about 4% compound annual decline over a very long period of time. This is a demographic shift that's going on. The iPhone has been around for more than 15 years, so this is not, oh, this is new technology. This is just a habit that people have and the way it's playing out and the way it's being used. 4.3 billion references to the online Superpages, yp.com, DexKnows, the internet Yellow Pages products, and the print product, there it goes, 3.1 billion references.
They crossed over a few years ago, where there were more references to our online directories than our print directories. I think what's important to realize in total, it's 7.4 billion references. These are really valuable references. These are people that are very close to the point of transaction. They have a plumbing emergency. They have something going on. You don't use the Yellow Pages to shop. You're not trying to figure out if Justin Bieber is, you know, married or not. I mean, when you go to the directory, you have a problem, and you're ready to buy. These are very valuable leads. If you're fortunate enough to be in a classification, in a geography where these directories still deliver leads, they're your lowest cost, highest converting leads that are available to you as a business.
When you compare what it would cost to get a lead, say, from a Google search engine or from Facebook or from some of the other online, you know, companies that have been set up to do that, those leads cost three, four, five times more than the leads that are powerfully delivered out of this 7.4 billion. The thing that you guys need to think about as you're investing with us is that it is a declining number, but it's us. It's virtually all us. We're the only player out there. There's a couple little independent publishers and a couple little spots. There's a couple little niche-y online directories, but it's all us. We own and control those leads, and it is declining, but it's all us.
We have the ability to monetize that over this next decade, and that's part of the power of this investment thesis. By the way, it's free because the entire valuation of our company rests just on the SaaS side. That part's not valued at all. People don't understand it, so it's not valued. Do the math. You know, it's $300+ million of cash flow coming from that business. It's very durable. It's gonna be around. It's gonna decline, but it's gonna be around for a long time, and it's not in the valuation story at all. We think it's important. I wanted to take a couple slides and just tell you know, how we see it. It will decline, and we won't fight that decline. We're not here to turn marketing services around and make it grow. We're building a SaaS business.
We are harvesting it. We're variablizing the costs. We've got a model every year for how we think that decline is gonna go, and we have lesser and lesser costs against it so that we can deliver mid-thirties% margins out for the next decade out of that business. Let's turn now and talk about small businesses and talk about our role in working with them. They need a hand. They need a little help. The way we've set ourselves up is with service as our differentiator. You know, a lot of small businesses wanna have digital transformation just like big corporations do. How do they do it? How do they slow their business down enough to learn it? How do they figure it out? We've set ourselves up as that guide, that helping hand.
You know, I call customers every week. A couple weeks ago, I called one of our new customers, been with us for about seven months, in Melbourne, Australia. Tariq Hussain. This guy's in the window business. He tints windows, and he does like, a lot of people have skylights over there, and he tints them so it doesn't get too bright. Does all this stuff. Anyway, he's got this great business. I think he's got seven employees, something like that. He's been advertising with the old Sensis, now Thryv Australia, for a number of years. He trusted his rep and liked his rep, and he made the transition into Thryv. He said, "It's just completely changed my business.
Everything now that we were doing on paper, we're now doing, you know, digitally. He said, "I'm a kind of a tech geek. I like to play around with this stuff." I didn't meet the guy in person, but it felt like he was kind of around forty-ish years old. He said, "I will be in my office piddling at 9:00 P.M. on a Friday night, and I'll try to contact you guys to get some help. Every time you react every time, whether I do your chat bubble, whether I send you an email, whether I call you guys are right there ready to help me, do a screen share and show me how to implement another aspect of Thryv into my business." How do we do that?
We're in the Philippines, we're in India, we're in Australia, we're in the U.S., and we're there all the time to serve and to help. That's been a big part of it. There's other software you can find online. If you go searching online, there's stuff that looks like it does what Thryv does. Just try to get on board. Try to figure out how to make it interoperate. Just figure out how to onboard your business. That's been a big edge, and that's why we've seen usage and engagement soaring in our business and why we have such low churn. The benefits to Thryv I think are, you know, relatively straightforward. It actually can drive growth. It's not advertising. It saves time and gets you organized, and it gives you freedom, mobility, lets you move around.
We have stories of small businesses that, for the first time, have taken their kids to the mountains camping for the weekend, and they're able to keep track of their business on their phone and see what's going on in their shop while they're out of town. They just happen to have a business that's very active on the weekends, and they can never go. People are getting out to see more of their kids' ballgames because they can monitor everything that's going on out of their pocket. This tool allows you to win, keep, and grow high-quality business. Part of what you're trying to do is get the right kind of leads, even if you're a small business. Thinking about Thryv, think about the world right now. GMB, Google is a big deal. We're super GMB-friendly. We're super SEO-friendly.
When you work with Thryv, you're gonna come up high in organic search results. You're gonna be found and relevant. You're gonna be there. What's the most expensive lead you could possibly get if you're a small business? It's a lead from Google because Google has an auction model that teases out the highest possible price of a customer that wants to get a painting job done. Maybe they want to paint the exterior of their house. 5, you know, local painters are competing, and Google teases out the highest possible price. Well, when you land a lead from Google or some other online sources, you've paid maybe more than that first job was worth to you.
You've got to be able to hang on to that customer in a digital database, and you've got to be able to nurture them and think in terms of lifetime value of that lead. Because, you know, maybe they, this was the first job, but now you're gonna maybe work with that business for years. Well, to do that, you have to have an automated, organized way to nurture them, to stay in front of them, to work with them. That's what Thryv lets people do. That's part of why we're able to help businesses actually grow. We're able to help them get referrals very easily. We're able to help them. For consumers, when they're interacting with a small business, if they have Thryv, they've got the client portal, they can exchange documents easily, they can pay digitally, they can get receipts digitally.
Everything can happen in a simple way that they're used to. One of the keys to how we're able to do this, Thryv doesn't do everything. No, no software does everything. We have an app store that sits behind Thryv. If you wanna e-commerce enable your website, no problem. Shopify is in there. You can connect it in about 15 minutes. Off you go. If you are using QuickBooks or FreshBooks or MYOB or Xero, and that's where you do your, you know, your back office bookkeeping, you can connect that in no time, and the data will share back and forth. Even to people that we theoretically compete with, like Constant Contact or Mailchimp, no problem. You just go in there and connect them, and all the data that you've been using in your Mailchimp is sharing now across the platform.
Speeds up your onboarding. Now, admittedly, we have email marketing in our tool, so there's overlap there. We don't care. We wanna make it as easy as possible for those small businesses to get on board and be able to use it. Then if I'm honest, sometimes when they get in and they realize, "Oh, the tool within Thryv gives me all the power I need. I actually don't need the other subscription," some people pare it back. We just try to make it as easy as possible for people to get on board and to work with us. When you think about the value prop, we're basically still dealing like we were in the marketing services business with the consumer and the business owner trying to get together. How does that work?
Anything to do with finding them online, Thryv's gonna help them. It's managing their listings on 60-plus sites all around the web. It's making them more SEO friendly. It's making them easier to work with. When you wanna contact them, you can make an appointment right online if they've got Thryv, no problem. You can send a chat message if you want. All those contacts are better. After the appointment is made to get together, start to do business, you're gonna get appointment reminders from somebody who's using Thryv, so that there's less no-shows. Their time is so valuable. That's gonna happen. You're gonna be able to exchange documents. Maybe you're gonna run some party or something, and you're trying to exchange with the vendor that you're working with what your specifications are.
All those docs are not only exchanged, but shared in a client card inside of the Thryv. No problem. Comes time to make a deposit or make a payment, all that can happen digitally. You can sign the screen and agree to the estimate that you got today, and it's all saved. It's all right there in the one client card, nice and clean. These were all separate pieces of paper five minutes ago. Now it's all organized on one simple thing. After you've done business with them, any time you wanna deal with them again, you can reach in your pocket, hit a button, and see who you dealt with, when they bought, what they bought. All of it's right there. All that CRM-type information is in your pocket all the time or on any other device that you wanna use.
The nurturing process can begin after you've done business. You can send a note out saying, "Thanks for doing business with us. I hope we did a good job for you. Here's a link. If you wouldn't mind, leave us a review." Small businesses are desperate for reviews because it's social currency. It's how people decide today if one business is good versus another. How does a small business collect those? Well, we help them facilitate that. We make it really easy for them to do that. Then months and months after they've done business, it's spring, rolls around, and we send a little note out of the Thryv that says, "It's spring, you know, why don't you get an air conditioning checkup? We'll come swap out all the filters and give you a check, get you ready for cooling season.
We'll do that for you for no charge," or, "We've got a $99 special," or whatever it is. You're tickling and staying in front of your existing customers, who are the most valuable to you. Remember how expensive it is to get a new one, and Thryv helps you do that. It's really a business that Thryv just has a tremendous edge. Gonna bring you now in the war room and let you get a little peek into the way we're thinking about the future of the Thryv product. We've never shared this outside of our company. We've been working on this for quite a while. I'm gonna reveal to you now our center strategy. The first Thryv was the first of our centers, and we just called it Thryv in the beginning.
It will be known in the future as Business Center, and we are planning many additional centers to serve more of the needs of a small business and to keep things simple and organized for them. They'll be supported, of course, by Thryvthrypay
Pay, by Thryv, the App Marketplace that we've talked about, and by Hub for Thryv, which is for franchise multi-locations that was being demoed outside in the foyer. If I can get this to go. Why are we doing this? The screen real estate that most people consume this stuff on is about that big. It's not very big. We wanna make it nice and clean and simple for them to navigate the screen, not be a million little things. A lot of our contractors have big fingers, you know?
We don't want them to push the wrong buttons. We wanna make it nice and simple for them, and you're able to hop from application to application and have an easy-to-navigate experience. We wanna make it cost-effective. If you're new, you're just getting started, you're dipping the toe in the water, if you're maybe a smaller business, you don't necessarily have to buy all the different centers. You can buy more of them as your usage grows, as you kind of build. You know, I know you guys think a lot about your models and how it's gonna develop. One of the questions I get asked a lot is, "What's your net revenue retention look like?" As we roll out these additional centers, it's an opportunity for us to move the annual spend that we're currently getting, it's around $4,000.
You know, we become the full operating system for your whole small business. You might be willing to part with $5,000 or $6,000. You know, that's really meaningful net revenue retention as we keep building this, you know, building this model out. We've said that we have an unfair advantage, that you know, we like to think that we're hard-working, nice people. But how was it that so quickly, in like seven years, we got a couple-hundred-million-dollar SaaS business? Well, we started with a really big business. We started with, you know, more than 1,000 salespeople calling on hundreds of thousands of customers. That was kind of an edge. We've delivered more than $1.5 billion in cash out of this business since 2016.
We've dividended back about $500 million through a tender back to our shareholding base, and we've repaid more than $1 billion of debt. You're gonna see later in a treasury presentation how we will, when we do a transaction, we buy something, we do something, we lever up a little bit, and then we quickly lever back down. We're really good stewards. Well, specifically, Paul and KJ are really good stewards of cash, and so we're really careful about how we deploy it. It's a cash-generating machine. 400,000 customers, we sometimes sort of kiddingly call it the zoo, meaning they're our existing customers. We can call on them, we can meet with them, we can talk with them.
The hardest thing to do if you're trying to build a SaaS software business focused on the small business is to get a conversation with a small business owner. That's the hardest thing. You have some great idea, right? You got some venture money, and you got this really great idea. How do you ever get a conversation with small businesses? We have them automatically. Like, we got an entire sales motion calling on these people every year, and as those businesses are becoming more ready to modernize, we're there, and we're migrating them over. We're organized this way. If you kind of take a look here, we've got our local channels and then our new channels. I'm gonna start by just talking about our local channels.
We've always had a 1,000+ person sales force with a big premise team of people actually calling you know, in Rapid City, South Dakota. They walk through your door, and they talk to you about this thing. We've had a big group of people that work over the phone doing the same thing. We've added to that this team selling element most recently, where we've got software experts who do, typically on Zoom, a demo of the software, which we record, and we focus right in on what the problem area you're trying to solve as a business is. This has unlocked for us a big step change in engagement with the customer, but also huge productivity lift with our sales force. Over the last 7.5 years, we've been migrating the sales force from marketing services salespeople to SaaS software salespeople.
The sales force has gotten much more digitally savvy over time as we've recruited and as we've trained the existing group. Productivity continues to lift because we're doing innovations on the marketing services side, like continuing to extend the life of the print directories longer, which creates more canvassing time to call on people and focus on SaaS. SaaS productivity keeps rising out of that group, and that's really what's driven everything for us so far. Much more recently, over the last few years, we've been building this side of it. We've been building the inbound channel, the partner, reseller, affiliate sort of channel, and the franchise channel. These are beginning to really get legs and get moving now. You know, we're continuing to invest in building them. That's a big part of our long-term vision.
Adding that in to what local is doing is part of how we're continuing to accelerate, you know, our growth. All of our life so far has been sales driven. There was no product-led growth at all. Some of you have said to me, "Well, you know, some of the companies we look at in SaaS have a land and expand model where they get a customer and then they are able to grow it over time." Because we had an expensive sales call taking place, we needed to make sure that we were getting a lot of money out of those customers because you couldn't afford to go sell them a tiny sale. If you're doing it with a human being walking through the door, it was costing you know, a hunk of money to go have that sales call.
What's next for us is this, and that's product-led growth is not replacing sales driven. We're gonna still have a big sales force. In fact, it'll actually likely grow because of the effectiveness that we're experiencing. We're gonna be introducing product-led growth, where the product roadmap has the new products we'll be able to land on and discover, begin to consume, begin to use them, begin to get some value from them, and then begin to pay. We'll use our sales organization to grow those customers. Our hard problem when we get SaaS outside of our existing zoo is we have the same problem everybody else does: having a good conversation. Having hand raisers that are consuming our product and have said, "I'm interested in modernizing. I'm beginning to use your stuff," is a lot easier conversation for us to have and to build on.
One footnote I also wanna make. I sort of blew by when I was talking about our zoo and our local sales force. Approximately a third of all of our sales that are coming in today are coming from referrals outside the zoo. The zoo's like regenerating itself. There's 400,000 businesses in the zoo, and then they're recommending about a third of all the new sales that we're making are their friends or next door or their guy they bowl with on Tuesday nights or whatever. They're bringing us lots of customers, and we're feeling that accelerating. There's more of it as there's more chatter now about how to modernize a business. You know, the product-led growth will really be driven as these additional centers kick in, and you'll see that layering into our plan.
We had a whole lot of recognition this last year. A lot of independent software review sites citing us as best value for money, easiest to onboard, best service. We're really proud of that. We're down to 1.5% seasoned churn, and that's almost enterprise-like. We're you know dealing with businesses with three you know three employees, five employees. I mean, small businesses are more dodgy than enterprise. They go in and out, different things happen. Our ideal client profile is sharpening up on these more established businesses. There's been this wave of new business creation kind of since COVID hit and the Great Resignation. That really is not our customer. We're really dealing with more established businesses than that. Let's talk about who we serve. 2-50 employees are kind of our world. Mostly service-based businesses, mostly established businesses.
Typically, our marketing services customers have been with us for eight or 10 years, really for quite a while, and typically about half a million in revenue. This isn't somebody's side hustle. If it's a side hustle, it's just probably not big enough, and we'll end up with a lot of churn out of that. That's not who we want. We've been, you know, really working to sharpen up this, and I'll talk about it in a minute. International is the next part of our play. You read the release this morning. We've talked about [sonnet], kind of how we see this thing playing out. Right now we're in Australia, Canada, the U.S. Over the next couple of years, you'll see us really move out into kind of the easier markets.
We're not gonna go to really hard places. We're gonna go to the obvious places that you would go. In the U.S., we think there's a 4 million TAM. Now, I have said in the past that we had estimated our TAM as kind of eight-10 million businesses. There's a little over 30 million small businesses in the U.S., and we've said, "Hey, you know, eight-10 of them are kind of our TAM." We've sharpened that up, and we've said it's four. The reason we've said it's 4 is we really have gotten disciplined about making sure they were big enough to really be durable users of the product. Because we find when we sell Chuck in a truck, little tiny businesses, that there's just churn there.
It's just too expensive for us to get involved. We actually allow that new start business a lot of times to go try a point solution or two and work their way up, and we've positioned Thryv as an aspirational brand. We cost, you know, eight or 10 times more than some of these little, you know, little tiny verticals or little tiny point solutions. Once you start getting frustrated with the limitations of those, you start asking, "Hey, isn't there kind of a more of a Mac Daddy complete thing I could go to here?" That's where Thryv sits. That's where we wanna be. We're really not gonna go back down, you know, market, other than like a PLG motion type of thing.
We're not gonna, you know, try to go get that guy that's starting his business tomorrow. That's not really our customer. Four million is the TAM that we're looking at there. And then internationally, the markets that we're looking at, the target that we're looking at, we think has an 8 million small business TAM. Our trajectory in the future, what do we see happening to revenue here? The midpoint of our guidance this year is $207 million. You guys have seen that. We've put that out. I'm effectively reiterating that here. We're really comfortable with that. That should be easy. The five-year target for our business is $1 billion. The ten-year target is $4 billion. Now we get to that organically. It's not through acquisitions.
We get to that by executing the strategy that we currently have in the marketplace as we see it developing. We think that this opportunity is a $40+ billion opportunity. As it is, we'll be barely hanging on. Like, in other words, this market's gonna develop so big and so quickly that to remain a category leader, to keep up, we'll have to grow at this rate. We think that's how big the opportunity is here. I wanna just sort of take you through some more granularity there. five-year targets, we're looking at 75% gross margins. Our gross margins are a little bit lower than that today, but our product roadmap would have that continue to improve to about that level. 20% EBITDA margins, we think, would be around where we will operate.
That'll allow us plenty of money to invest and still growing very fast. 150,000 customers. Net dollar retention, we think, will hover right around 100% as we continue this evolution. Three-quarters of our business will be the SaaS business in five years. Looking out further with 10-year target, we see a $4 billion target, similar metrics, about a half a million subscribers, and 95% of our business being SaaS and just having a fairly small marketing services piece. We've been asked many times, sometimes even publicly, can we, should we split these businesses? Good bank, bad bank, and all that. They work so beautifully together, and it fits so synergistically in our model that we think that this is our superpower, not something we should spin away.
You might say, "Oh, but you could get a higher valuation this week if you do that." Well, we're not running the business for this week. We're running the business for the $4 billion big picture. That's what we're going for. We think that having this gigantic rocket attached to our business really helps. That's the way we're thinking about it. Why do we think this plan can play out? Our North Star is engagement. We're all about making sure they're actually using the software. We go to great lengths to not sell people who won't use it.
When a customer comes through our process for a demo and they say in the interview, they want a website and they wanna manage their listings around the web, we actually don't sell them the software because we don't want somebody buying the software who's not using it because they're gonna disengage, and they're gonna maybe churn. We just sell them what they need, and we say, "Look, when you're ready to modernize, we'll bring, you know, we'll bring you on to Thryv at that point." That's part of how we've gotten the churn down so low. North Star is engagement. That's number one. Number two is subscriber growth.
We believe that the zoo is gonna yield an enormous amount of additional customers without having to go meet anybody, and they're gonna refer probably even greater numbers than they are so far, more of their friends to us. We've got our product-led growth motion, and we've got our new channels driving subscriber growth. We think ARPU will keep growing. I mentioned earlier that, you know, we think it's not unreasonable for a small business that's successful to maybe spend $5,000, $6,000, maybe even $7,000 a year on a big platform to run their whole small business on, that gives them complete organization in their pocket. We think that's not through price, but just by delivering more value services to them. We think that's totally doable.
Product-led growth, we've not had in our journey so far, but the products that are in the shop being developed right now will very much fuse in product-led growth in addition to the sales motion that we already have. That's a big part of how we do this. Net revenue retention will right now be a little under 100%. There's a little hole in the boat. We're not quite 100%. We'll get to 100% fairly soon, and we'll hang out there maybe even a tiny bit above it with all the PLG stuff that we're doing. That's how we see this unfolding. It's not acquisition driven. We believe that the marketplace will support that $1.4 billion goal, and we think that we have all the pieces in place to execute and deliver against that.
I've got an opportunity here to take a couple of questions and then we'll move on to the other presenters.
If everyone could just stand up and say your name and your firm, that'd be great.
Sorry. Hey, Joe. Thanks for the day. Scott Berg here with Needham. Question on your growth goals there. It looks like you have ARPU growth growing from about $4,000 today to $6,700 in 5 years and then maybe $8,000. Those are all round numbers, obviously, in the next 10 years. Is that driven mainly by you moving up maybe the size of customers, 2-50, going above that at all, or that average today, that's maybe 10 going to 20? How much of that's maybe ThryvPay contributing to that, or is it maybe more customers buying additional modules that you expect to roll out over the next several years?
The last one. Our assumption is that even the businesses that we have that are engaged in using Thryv now are. We don't have anybody using everything that Thryv does. Like, there's still growth happening even in those very engaged. I could bring our best success stories and bring them up to the stage here, and they love the product, and they use it, and they feel it's really valuable, but they're still missing, you know, pieces that they aren't using yet. It's really us staying in the same target, 2-50, but more deeply serving them, providing them more things, them buying more modules, Marketing Center, them buying more seat licenses, them getting more involved. There really isn't. It's not predicated on us changing who we go after. It's us doing a better job for them as they grow into using it more.
Hey, Arjun Bhatia, William Blair. Thanks for having us, Joe. Well, as you think about the next 5, 10 years, is there a point where you get dragged upmarket by your customers, maybe beyond the 50-employee benchmark that you've laid out? Not 2000, but 100, 200 employees as the product suite develops, as your customers grow. How do you think about that opportunity?
I know that does tend to happen in, you know, in SaaS land. People always seem to move upmarket. I certainly don't, you know, have the ability to tell you definitively exactly how it's all gonna play out. Our focus is really on our existing customer and delivering for them. Arjun, you will know the tension is between keeping the product simple and easy to onboard and easy to use and easy to access, and then delivering the powerful tools that you need as you start moving upmarket. You know, I don't know that I'd be that disappointed if a few of our people outgrow us and go up to some enterprise-level solution because they've done so well. You know, remember the number of customers we have.
You know, we're forecasting a half a million customers here. I think there's a big pool of small businesses, and at least for now, that's really been our focus, and we're not really expecting to become like light enterprise or something like that.
Dan Moore with CJS. The guidance, obviously, let's look at the next five-year period. Talk about the cadence of net customer growth that's expected. There's got to be an inflection point somewhere. When do you see that coming, 2023 or beyond? Similar question for adjusted EBITDA margins. When do you see those expanding in the near-term five-year plan? Thanks.
Yeah. I mean, I'm not gonna turn today into a modeling session, you know, like start going through much detail. Broadly, answering your question, you know, we've already been profitable. We actually, with our new board, we have an incredible board that we put together about a year and a half ago that are SaaS software experienced people who've scaled these companies before, who basically said, "You guys are crazy. You know, why are you making money? We're making double-digit EBITDA margins with this SaaS business." They say, "Why don't you let it grow? Leave a little bit of that money back in there." When we left a little bit back in there, its growth took off, and it really started accelerating.
They said, "Well, leave a little more in." It's a choice that we've made to run at that kind of, you know, sort of 10-ish% minus. Remember, we've got $300+ million on the other side, so it's an easily made choice. We're not having to go out and raise equity to do it or something like that. We feel that the operational leverage of the business as it's scaling in our models, we'll actually try to go past that point in EBITDA. We'll have a lot of money to invest delivering 20%, you know, EBITDA margins. In terms of subscriber growth, you know, we're seeing it accelerate right now. Remember, as we're lapping now going through 2022, you have Thryv Australia kicking in now. You have Vivial kicking in now.
These new channels are beginning to really bite and get traction. The changes we made with our local channel by changing the life cycle of the print directory not only improves the economics and marketing services, it gives a bunch of additional time, and that time is yielding big productivity growth. I think the last thing I would say is that the market's just way more ready in the second half of 2022 than it was, say, in 2020 or 2019. We're really feeling a high level of interest. I'm gonna take one more, and then I'm gonna jump to the next session. There'll be plenty of time at the end for more, so.
Hi. Bill Chen from Rhizome Partners. Let's say you have a customer who's been onboarded. You know, good amount of engagement, six months in, and he churns. What's the reason? You know, this isn't someone who sign up and just never use it. Like, you know, they actually use it, use it quite a bit, and just said, "This isn't the tool for me," six months or twelve months in. Like, what's the reason for that?
I wanna tell you, I'm happy and proud to say that that doesn't happen very often, what you just said. When we lose them, it's 'cause we didn't get them using it, mostly. I'm not gonna say it's never happened. It could happen. They may have had, you know, a disagreement with somebody or something going on inside their business that changed their needs or whatever. What I'm hearing in that question is you're saying, "Well, is there something direct they could jump over to that's just like Thryv?" The answer is that there isn't.
There's a million little apps of point solutions, and there are little verticals that people are building out, like for pest control, to keep track of, you know, when you apply the chemicals and what the humidity and the temperature was that day, which are useful things. We're building out our verticals and beginning to add some of those functionality. I guess that could be a reason maybe they're going into one of those little verticals, but they'd be giving up a lot of the power that Thryv gives. Obviously above us in the market, there's Salesforce way up there, and there's even like a HubSpot for really sophisticated marketers that, but it doesn't do a lot of the rerunning the rest of the business stuff that you would wanna do.
I'm gonna cut it off there in terms of questions, just in the interest of keeping the presentation going. At the end, we've got a nice section for questions. I think some of the questions you may have will be answered by the additional presenters. The next one you have is a treat. It's Ryan Cantor, who's our Chief Product Officer, who is fabulous at this. As much as I love small businesses and the technology that we're using, Ryan is right there too. I'm gonna show a little video as we transition and ask Ryan to come up. Thanks, everybody.
My name is Kate Maxwell, and I am the owner of Wingmom, Inc. I started Wingmom, Inc. in 2017. I was in a transition in life. In 2016, I had lo st my fiancé. He was a firefighter, and he died in a fire. It took me a long time to get my footing. Everybody in my life, the community, my best friends, my family, they rallied around me, and they did everything for me. They took my kids to school. They did my laundry. They cooked. They cleaned. They basically enveloped me with so much love and took care of me when I couldn't take care of myself. I wanted to do for other women what had been done for me and other families. Wingmom, Inc. started. Before we used Thryv, I was the communication hub.
We had 3 employees, and now we have 90. Thryv helped us basically take our business to the next level. Now that we're contactless and we're able to accept all forms of payment, I now have a very clear picture of what's working, what's not working. I chose ThryvPay because it is all-encompassing. It is a holistic approach to the way that we're running our business. The business actually just grew naturally because the clients saw how easy it was to utilize the product. We could never kind of look beyond to see what the possibilities were, and Thryv allowed us to do that. I am treated as if I am a VIP client, even though I am a relatively small business. I don't know where we'd be without Thryv, honestly. It's been a world of difference.
Hello, everyone. My name is Ryan Cantor, Chief Product Officer. I was pleased to join Thryv in 2016 after having worked with a number of my fellow executives at a company called Yellowbook, as Joe alluded to. Prior to that, I enjoyed stints at both AOL and Apple, helping small businesses adopt digital tools to run a more efficient business. I'm excited to chat with you today about the future of the platform, the future of the product. Before we do that, I wanna dive in a little bit of how we view small businesses today. I got questions outside, and I think even some of the questions we got today are, "Who are your competitors, and where are small businesses operating at this moment?" Small businesses are entrepreneurial by nature. They didn't get in business to run software.
Software is a means to an end to allow them to pursue their passion. They're thrifty. Oftentimes they get started with a spreadsheet to keep themselves organized. They use email to communicate with their customers, and of course, they found some way to get paid. That's just how it gets started. As we round the first year in business, they have an accountant who says, "Maybe you should use an accounting suite." They have a friend at a networking event who suggests that they adopt an email marketing platform to better engage with their customers. Their website should evolve and get a web chat client. Well, we should have social media, and we should create a Facebook page.
I get burned by a customer after doing a job, and I need to send them a document and get a digital signature so it doesn't happen again. Before long, this small business owner now has 10 logins, 10 passwords, 10 pockets of data. Their pursuit was noble. They adopted these tools to help them grow their business more successfully. It has now presented a barrier to their growth. It is next to impossible to hire talent. This system was designed by the owner. It operates perfectly well in their brain, but it's not transferable to the next employee. This now becomes a barrier to their future growth.
At Thryv, we focus all of our innovation in the entire platform on meeting SMBs where they are today, reducing friction, enabling them to adopt the end-to-end robust platform that is Thryv without disrupting their day-to-day business. This allows us to reel them in and allows them to adopt incrementally features and capabilities at their own pace. What we found, and we often get this question is, which feature do plumbers use? There are no two plumbers alike. Joe likes to refer to them as snowflakes, each one at a different level of their own tech adoption and their own comfort. It is this focus on reducing friction, as Joe alluded to our interoperability. Thryv is proud to present our robust App Marketplace. Thryv considers themselves an open shop.
Whereas other platforms might be hesitant to include competing functionality that integrates, we embrace it because we identify that a lot of small businesses have adopted one of these solutions prior to joining us. By including them, when the small business is making the purchasing decision, they don't have to give up what they've already enjoyed. They can bring it with them. The data comes over. And for that reason, Thryv integrates with some of the leading accounting software, social media platforms, payment solutions, and more. When we think about our roadmap, it comes from a core philosophy, and we call it the SMB hierarchy of needs. This drives our prioritization and the way we think about what we should build and how we should build it. At its core foundation, it's financial. No money, no business, no software, no products, no customers, no expansion, no employees.
Small businesses need a way to be paid efficiently and conveniently. Once they're getting paid, they move up into communication. All small businesses need to communicate with their customers in some form or fashion. It's essential. Now that we're being paid and now that we're communicating with small business owners, we've created chaos. Volume starts to ensue. I have to follow up with this message. This person owes me money. I'm keeping up with this job or this project. Now they need order. They need a process. They need a system. They need organization. Once they have order, communication, and payments, they are now to grow successfully. Small businesses who are growing successfully are now striving to be the best small business they can be. They're expanding into other locations, new features, new products, and new markets.
This focus on the hierarchy of needs had us focus very deeply into the payment space, improving everything from estimates to invoices, split payments, deposits, packages, ACH, card on file. Virtually any way a small business owner wants to get paid, Thryv can support. It is with this focus that Thryv is now supporting and helping small businesses manage over $1 billion of payments annually, which is a 5x improvement over the last two years. The focus on reducing friction meant that we didn't just track online payments, we allowed small businesses to track offline payments because we understand the small business community that we serve. These are service-based businesses with high-ticket items. They are reluctant historically to adopt digital payment solutions because they don't want to pay 3% or more on these types of bills. Thryv allows them to manage their offline transactions.
This provides low friction for them to adopt our platform and provides Thryv a unique data point as we move forward to know specifically which customers are still using offline payment options, so that we can further penetrate them with our ThryvPay offering. Next up on the hierarchy of needs is our centralized inbox, one singular place where small businesses can communicate with their customers. We've added a ton of channels, so whether a customer wants to engage with a small business owner on email or SMS or Facebook Messenger, Instagram Direct, Google Business Messages, and more. It seems like every year, the market's getting faster and quicker, and every day there's a new app where consumers can communicate with small business owners. This creates wonderful opportunity for us as we simplify all of that.
Great care was taken to ensure that as a small business owner, they see one singular stream of consciousness, one conversation, no matter which channel it comes from. Thryv now powers 5.6 million conversations annually between small businesses and their customers, making it more convenient than ever to work with small business owners who are using Thryv to run their business. Now that we've talked about small businesses, let's talk about their customers. Thryv is an end-to-end client experience platform built for growing small businesses. We help them manage the entire lifetime value of their customers. We help them get the job, manage the job, and get credit for the job. One of our key differentiators in this market is that we help them further upstream than most of our competitors. We help them get found.
For a majority of service-based businesses, their website often serves as their brick-and-mortar establishment. Yet the connection between their software and their web presence is hard to manage, and often something that small businesses struggle with. For that reason, a number of Thryv packages include a professionally designed mobile lightning-fast website that is fully integrated into their software for them. As Joe alluded to, we also integrate with Google My Business and publish their information across over 60 popular sites on the web, helping them get found quicker and easier than ever. Once a small business owner is found, we make it easy for consumers to engage. You all expect a certain level of experience with any business that you operate with.
We talked about the inbox, but in addition to that, Thryv can allow you to request a quote, submit a form, schedule an appointment, and more, all digitally with the small business owner. Now that these prospects and these customers are flowing into the CRM, Thryv helps you organize your jobs, your tasks, your accounts, assigning out to staff members, creating notes, managing your schedule, your crews, keeping everything organized efficiently, so you understand where each project is, at what stage, and are delivering an exceptional customer experience. Now the job's done. It's time to get paid, and we've talked about that. Offering easy and convenient ways to digitally transact with your customers is essential. Because of all the data we've managed upstream with that client journey, we now can automate the thank you, the request for a review, the request for a referral.
We know exactly the precise way and the precise time to send that message across a variety of channels. We then also know how long it's been since the last time that small business has interacted with that customer, and we help that small business generate repeat business by nurturing them and inviting them back. Around the circle is a whole host of functionality. I'm not gonna go through, I promise. When you look at them, it's important to know that each one of those individually represents what would otherwise be a point solution, a subscription, a monthly payment, a pocket of data, a login, a system to learn, and Thryv simplifies all of that for the average small business owner. Brings me to Thryv Pay. In October of 2020, Thryv launched Thryv Pay.
Prior to that, Thryv had integrated with a number of leading payment processors, and yet we still heard from our small business, service-based business customers that their needs were not being met. Low number of transactions, high average ticket required a unique solution, and we brought ThryvPay to market. In our most recent quarter, ThryvPay is now delivering an average of $100 million in annual payment volume. Through innovation and focus on our ideal client profile, as Joe alluded to, we feel very confidently that by the end of 2027, ThryvPay will be processing over $3 billion in annual payment volume. Let's talk about some of those innovations.
Later this year, when we look at ThryvPay, as the pandemic subsides and small businesses are starting to engage more in back to face-to-face commerce, ThryvPay will be launching branded hardware. This allows small businesses to engage in face-to-face transactions, offer more competitive card-present processing rates, and allow to accept tap, chip, or swipe transactions. Furthermore, we plan to launch a ThryvPay branded Visa card accepted anywhere Visa is accepted, allowing SMBs quicker access to their capital. Additionally, it will allow them to keep their business expenses separated from their personal expenses and benefit from all of the integrated experiences in Thryv and all of the accounting app integrations that we already have. Buy now, pay later. Offering consumer financing is another payment option inside ThryvPay. I'll use the example of an air conditioning technician.
It gives them the ability when they go out to a client, instead of offering a simple repair for $500, they can offer a replacement for $5,000 and offer a quick, convenient, easy consumer application experience, and the small business can track that application all the way through to the disbursement of funds directly into their ThryvPay merchant account. International expansion. We plan to launch by the end of the year ThryvPay into our international markets of both Canada and Australia, further expanding our reach and helping small businesses globally. With that being said, I'd like to invite you to watch a quick video now to learn a little bit more about ThryvPay.
Customers today prefer the unique and personalized services that small businesses offer while demanding an easier payment experience with great customer service. In fact, 91% of customers prefer small businesses when it's convenient, and 77% say they are willing to pay more for great service. Customers will choose you first when they know you will put them first. You don't sell cups of coffee, so why use a payment provider designed for those who do? ThryvPay was designed specifically for service-based small businesses. It gives your business everything it needs to deliver on customer satisfaction with convenient payment options at affordable rates. An app uniquely designed for your service-based business, getting you paid quicker, easier, and on the go. You shouldn't have to choose between good customer service or being profitable.
ThryvPay includes features that make you more profitable, helping you secure more upfront revenue with contactless payments and next-day funding. You can offer your customers more convenient payment options, letting them choose how they want to do business with you. Service-based small businesses that switch to ThryvPay are saving thousands. With competitive rates, optional pass-through convenience fees, and easy ways to control your transactions, like adding spending caps and thresholds. ThryvPay is unlike every other payment app on the market. Not only is it fully integrated, we include service every step of the way. Our dedicated support team is there to help you through those pesky disputes and chargebacks, so you can focus on what's most important, running your business hassle-free. Competitive rates, convenient features, transparent transactions, everything you need to grow your service-based business, be more profitable, and deliver exceptional service.
Next up is Hub by Thryv. Again, in 2020, we identified an opportunity in the marketplace. Emerging franchises, service-based businesses with 20 to 100 locations were trying to grow and add locations, but they were doing it without a stable operating platform, without a consistent way or even a blueprint on how to run a successful location. It required every location to be an A player. They didn't have a consistent brand. We launched Hub by Thryv, a reporting console that sits above individual Thryv accounts. While each franchisee is running their day-to-day business using a Thryv, the franchisor can sit and see in real-time results about each location's doing, which are their best locations, maybe which one of their locations need support, and reach out to them proactively.
Over the first three years of Hub, we have more than doubled our locations supported by the platform every year. Again, we believe that by the end of 2027, over 10,000 emerging franchise locations will all be supported under the Hub platform. As Joe alluded to, our future now is looking towards product-led growth and expanding into multiple centers. Everything I've shared with you today is really going to be in the near term rebranded Thryv Business Center. Everything a small business needs to run their day-to-day business and provide an excellent customer experience. Today, I'm pleased to announce our second center, currently in beta with a number of customers and slated to launch in the second half of this year, Marketing Center.
Everything a small business owner needs to market and digitally market their business and attract and retain top-tier customers. This starts a multiple year journey for us, where we have multiple other centers in development. There are three other centers in various stages of development today, and while I'm not going to disclose what they are, trust me when I tell you that they are equally important yet related problems that every small business owner faces. These are all supported by our pillars of ThryvPay, our App Marketplace, and Hub by Thryv. Let's dive into Marketing Center a little bit more. Today, CRM inside of Business Center supports a number of engagements between small businesses and their customers. You're sending out estimates and invoices, documents, receipts, and each one of those is being opened up by the devices of their customers.
Via consented attribution, Marketing Center now takes that data, connects it with their analytics, and turns anonymous visitors to fully understand who they are and where they came from. This is an essential but often missing step in small business marketing, and therefore, small businesses today don't know what's working and what's not because they don't know where their prospects and their customers are truly coming from. With that data in hand, we are going to allow them to buy transparently omni-channel digital marketing campaigns inside the platform with a click of a button. We then support them with a number of integrated marketing tools to help them run the most efficient and impactful marketing campaigns they can. Diving into that consented attribution, this is a visual that explains it a little bit more.
Typically, a small business owner, when you look at your website analytics, will just see it in terms of a number. They're either new or returning visitors. We'd like to think that people will click on an ad and fill out a form and go all the way through what we call the happy path and fully understand how a prospect becomes a customer. That never works that way. There's a phone call in the middle. Something breaks, but it's okay because the next time that small business owner sends them an estimate, we can track those devices and know where and how that customer found that small business owner.
Furthermore, once they become a customer and they visit the website to come back, Marketing Center will let you know that device visited that website again, and it might be time to reach out to that customer to reengage them in future business. With that, I'd like to invite you to watch another video to learn a little bit more about Marketing Center.
Introducing Thryv Marketing Center, everything a small business owner needs to market their business, get better customers, run better campaigns, and deliver next-level results. Offering the easiest way to run a modern business in a centralized place for all your marketing needs. An easy-to-use platform where you're in control. With full flexibility, getting customers when you need them, targeting the right audience and your dollars with precision. Whether you want to retarget website visitors or run a paid campaign, Marketing Center tracks all your online efforts with full, rich analytics. You'll have deeper insights, telling you where your customers are coming from, turning anonymous visitors into identified prospects to drive more revenue. In the digital world, prospects and customers don't visit your website or click on your ads, their devices do. Thryv Marketing Center matches your CRM contacts to their devices, showing you how they interact with your business.
Technology traditionally limited to large corporations, Thryv Marketing Center handles the heavy lifting and complex data analytics so you know exactly where your customers are and where they're coming from. When you're ready to run paid advertising, whether it's on Google, Bing, Instagram, Facebook, Yelp, or connected TV, Thryv Marketing Center has you covered from one central platform. You can even track the effectiveness of your lawn signs or vehicle signage. Marketing Center makes it easy with trackable phone numbers, bringing all the performance analytics into your centralized reporting. With advanced AI-driven recommendations, you'll be able to leverage, reach, and convert more customers, helping you identify the lifetime value of every customer. More affordable, more transparent, more actionable, better customers plus smarter campaigns equal next-level results.
Marketing Center, our second center on our journey to create multiple centers and really drive product-led growth and expansion with our customers. We think as we look towards the future, this makes Thryv the end-to-end small business platform. With that, I'm happy to take a few questions.
Do I need a mic?
Yeah, they're coming for you.
I don't necessarily need one. Can everyone hear me? Hello? Yes, there's a question on this auto ID. Just sort of wondering, is there opportunity to like cross-sell even? Like, for example, I don't know, if I'm going to buy like construction materials, maybe, I don't know, you can also sell them installing pump plumbing or something. Or is it really just to help like individual small businesses identify when a customer comes back to them specifically? Just wondering if there's a broader scale there.
Yeah. Right now we're focused on the individual small business and obviously are extremely sensitive around consented attribution given the state of online digital marketing today. Right now we're focusing on helping that small business and their customer stay aligned on their needs as opposed to sharing that data across multiple varieties, at least for now. Good call.
Yeah. This is a little in the weeds, but on the buy now, pay later, who is funding that, is there outside partners? Have they already been identified, et cetera? I'm just trying to understand how that'll play out. Thanks.
Yeah, absolutely. We're not disclosing the name today. Yes, we are working with a fully integrated outside partner, and it provides a risk-free method both for Thryv and risk-free for the small business owner. They assume all of the loan, post-sale, if you will, and collection from the consumer, and the small business gets one lump sum payment as soon as the job is completed.
Hey there.
Oh.
Hey. Do you track and how do you think about the number of paid products used per customer?
We do track. How do we think about the number of paid products per customer? We obviously are tracking that as we focus on product-led growth and expansion. Thryv obviously has a good, better, best, and then we have a number of paid add-ons as well, and we are tracking not just our paid add-ons, but a number of the packages also include entitlements and features. We track very diligently, and Grant Freeman, our Chief Customer Officer, is gonna dive into that a little bit more to talk to you how we focus on increasing adoption from one feature to the next feature to the next feature, and then using which feature they're heavily using to pinpoint where the upsell, cross-sell opportunity presents itself.
Thank you.
Hey, Ryan. A couple questions on the center strategy. One, can you just walk us through the cadence that you're expecting to introduce new centers? From the slide, it looked like annually. Is that I don't know if that was just a placeholder or if that's how we should think about it. Two, when you think about new centers, is it all net new capability or is there opportunity to actually disaggregate some of the capability you currently have into net new products?
Both. I'll answer the second part first. There is a slight unbundling going on. I think we often get asked, "Are there going to be price increases? Where are the price increases have?" We've traditionally focused on really focusing on adoption and providing as much functionality as we can value for money. As we move forward and we look at other centers, it does give us a unbundling capability. There are certain components in Thryv today which would be better served, let's say, in Marketing Center. It would be a better fit, it would be an easier conversation. We'll be looking for those opportunities for sure. On the slide, definitely a placeholder, but that is how at least we're thinking about it now on an annualized cadence.
It's more important for us to get it right and have it really well-baked and really well-established, but that's the cadence we're marching towards. I think we have time for one more question.
Thanks for the product overview. I guess continuing the questions on the center strategy, how should we think about the functionality, maybe the depth of functionality of those products? Do you expect to land with these different centers, or is it landing with the core Thryv functionality today and those are really more upsell opportunities versus, you know, best of breed that you think you can land with those other centers? Thanks.
Yeah. I think we have aspirations that as we move to the future, that we can land actually in other centers, and that will allow small businesses to really, when they meet Thryv, to identify the pain point and the problem that they have most importantly, and identify which center would be a great place for them to start. I do think it's the latter. That obviously then all would drive us to helping them adopt the Business Center at its core. Having that CRM, that centralized customer experience is still gonna be core to our foundation. Great.
With that being laid out, I'm gonna hand you off now to a quick intro video that's gonna tell you a little bit about what the Thryv marketing department's been up to over the past couple of years.
Thryv's marketing is making a big impact across the country and now the globe in the U.S., Australia, and Canada, building our brand across multiple platforms through our online presence, social media, commercials, ads, awards, and even print publications. Let us show you how we thrive. Overall thryv.com traffic was over 3.8 million in 2021. Organic traffic saw 38% growth year after year with an average 9.6% conversion rate on site compared to an industry standard of 3%-5%. That means visitors like what they see. It resonates, so they click. Our fresh and engaging content, including free small business tools, guides, email newsletters, targeted campaigns, social community and helpful videos, all helping us break through the noise and understand our customer base better.
Generating 183,855 total leads and 93,100 marketing qualified leads. We've got social media down to a science, increasing our social engagement by 48%. We've added more than 10,000 followers across our platforms in one year. We also dominated the competitor space with Facebook, increasing our engagement 4 times more. We've increased organic blog traffic by 151% with less than 20% bounce rate. More SMBs consume our content and stay a while to read it. Awards. We've earned a ton in 2021, including G2's Leader in Small Business, to Easiest Setup and Best Support, to 2021's Top Customer Service Solution Provider, Top Ten CRM Solution Providers, and a whole bunch more.
We earned top digital media placement and even some top cover stories featured in Entrepreneur, USA Today, Contractor, Small Business, Frugal Entrepreneur, and more. Our small business owners love us, sharing their story about Thryv and how it has impacted their business, turning them into one of our greatest trusted resources to new and potential Thryv clients. Thryv's marketing, catapulting us into an even better 2022.
All right. Good morning, everybody. My name is Grant Freeman, and I am the Chief Customer Officer here at Thryv. I'm really proud to share that I have spent the past two decades of my life with small businesses, helping them succeed right alongside many of the people that you've already met or will meet in the next phases of the presentation. I've been at Thryv for seven years, and I couldn't be more excited about where we are right now in our journey and certainly where we're going to be. My primary focus at this organization is ensuring that at all times we remain 100% client-centric. A major part of that responsibility deals with the journey that we put our customers through and focusing, as you heard Joe mention, on our North Star, which is an engaged user.
When we talk about engaged users, we have one right here. We have Ronnie and her mom, Anne. Ronnie and her mom Anne run Diva Dog Grooming. They're a highly engaged user, and we're gonna dive more into the journey that we've had with them over the course of the past four years working together. I bring them up now because Ronnie is representative of almost all of the small businesses that we deal with, in that they had the courage, the entrepreneurial spirit, to open a business in their garage about five years ago. They get it to a point where they have a small retail location and a few employees bringing in some decent revenue, but then they can't grow anymore, and they don't understand why. They seek out help. That's where we come in.
That's where we come in with even more than the amazingly robust platform that you heard Ryan talk about and that you've seen demoed out in the foyer earlier. That alone is not enough because Ronnie and her mom, they need help. That's why we chose. It was a conscious decision based on how much we know about how small business acts to choose service as a differentiator. You can't just give somebody software and say, "See you later." They need help, and we have chosen to be their coach through this process, and we're proud to be that. Let's take a look at the actual journey.
This journey was built really to ensure that we bring the right qualified prospect to the table, we sell them the right way, and that we engage them early and continue to deepen engagement over the course of time, which then leads to us finding additional solutions that they will purchase in order to solve additional problems or modernize different parts of their business. There's really four phases in this journey. The first one is presale or lead. Now, you just saw an amazing video showing what our marketing department can generate for us, right? But we also have the secret weapon that Joe talked about, the local sales force interwoven into the fabric of the communities across this country and across Australia, right? They have relationships that are fantastic. We spoke about the zoo.
Many of our local sales reps have relationships where they've delivered value for people for many, many years, and they're able to bring them to the table as a really qualified candidate because we understand the depths of their business and what they need. That's a distinct advantage in lead generation. Next is sales. The actual sales process for us has evolved big time over the course of the last couple of years, and I'm gonna get more into that in a second. Suffice it to say, we've simplified the process. When you saw that wheel from Ryan, right, we can solve so many problems, but we choose to focus on what's ailing the individual small business at that moment and give a really unique and catered demo to them, showing them specifically how Thryv can make things better in the short term.
Then after we gain their trust, we add more over time with the fourth phase, the growth and account management phase of our business, where we have client success partners who reach out to people. We're triggered to reach out to them by activities they take or they don't take to seek to understand now that they've solved one problem, what else can we do for them? This journey leads us to where we wanna be because it helps our customers win, first and foremost. Let's dive a little bit deeper into the acquisition piece. Joe had mentioned the software sales team that we have. That's sort of that centralized team selling model, right?
The software sales team was created because our client experience friends told us that when a customer receives a high-quality demo that is hands-on in many cases via Zoom, and they see specifically how easy it can be to fix something wrong with their business or to modernize something, make something better, we have not only a higher conversion percentage, but it actually makes everybody more active out there, more apt to bring in more people because it's a simpler motion. That software sales team is broken into really two different sub-teams. The demand gen team, which is sort of your typical SaaS motion. We have the marketing-generated leads that come in, a sales development rep that qualifies them and schedules an appointment, and then some salespeople that close those. The team selling people that we've spoken about already.
Pairing somebody that's a software engineer with a local representative that has all of this amazing relationship capital and equity built up really gives us a 1 + 1 = 3 effect. Let's talk a second about the sales process and the simplification of it. There's just 3 steps. The first one, we seek to identify and understand the problem that the customer is having at their business or what they're hoping to do a better job of. The second one is understanding the impact. Now, this is a really big one for us, and it's something that came to us about a year ago. We actually want them to verbalize the impact to us.
We want them to be able to state the impact, the adverse impact that whatever their problem is having, 'cause it leads to a more natural close at the end of the sale. The third one is we show them with that unique and catered demo, specifically how we're going to solve the problem that they're having. Let me give you a quick example using Diva Dog. Ronnie and her mom, Anne, that you met at the beginning of this part of the presentation. Like many businesses, they dealt with no-shows, right? They're a dog groomer, small retail location. Every time an appointment is booked and the little dog isn't sitting on the little table at 8:30 A.M. like it's supposed to, that's wasted, and that can never come back, right? That's lost opportunity there.
When we understood that problem, we asked Ronnie to really quantify for them, like, how many times is that happening a month? Is that big? It was in excess of $1,000 lost, which to her was a big deal. We showed her how simply using a CRM instead of the Post-it notes that she had all over her mirror when we first met her that had dogs' names and contact phone numbers, right? Just like you would picture in your mind an evolving small business. When we were able to show her how simple it would be to use the CRM, to use the online scheduling capabilities in Thryv, and trigger reminder messages, she was hooked. You see, we didn't have to go into all 20+ features of Thryv.
We had to find the one thing that would solve what was ailing her at that moment. As you'll see, as we get into it a bit later, over the course of time, she gladly adopted more and more of the technology, getting deepening engagement over the course of her time with us. Next, let's talk about retention and engagement. Now, it's really simple, actually. Retention is the natural byproduct of doing things right, of understanding your customer and delivering value that's in excess of what they're paying for the software. Retention really starts in the sales process, but it really, really solidifies in the onboarding. We seek to onboard every customer quickly and get them engaged within that first 48 hours post-purchase while they're still so excited about making the decision. In addition, you'll see we have a growth and account management, right? That's extremely important as well.
Although initially, it's extremely vital to help them solve a problem and use the software from the get-go, that on its own is not enough. Over the course of time, you have to find additional ways to use the software, additional ways that they can implement new technology to modernize their business and get even more efficient and more effective and grow even quicker. A lot of these bullets up here you've seen before, but the time to first value that I mentioned is one of the most critical. That came out. We live in the data, man. Myself and my team, we live in the data, and the data showed that sorta every minute that goes by, day three, day four, day five, interest starts to wane. You lose that immediate excitement that you had during the sales process.
Solving additional problems over time, that obviously leads to your net revenue retention number, right? The ability to isolate problems through having conversations and understanding somebody's business, and then figuring out the solution that you have to solve it as well. The journey works. It's working. You've seen that already in a lot of the metrics that we've shared and the stories that we've told. Let me show you some first net promoter score numbers. These are transactional, so this is the one-to-one. All of you have received something from Delta Air Lines or American Airlines that said, "How likely would you be on a scale of 1 to 10 to hire a specific employee that you just dealt with?" That's these.
We analyze every single interaction that we have with customers, and what you can see up here are industry-leading numbers that anybody would be proud of, with a +79 in sales, a +82 in the onboarding process, and a +93, even as we attempt to grow and engage them deeper over time. These are a great indicator of future success because it shows that we're delivering on our promises to customers, and they're excited about working with us. What does that mean? That also means that we have three fourths, three-quarters of our customers now are engaged with at least one core feature of the software, which means they're using the software to help them run the day-to-day business activities. What does that tie into? Daily active user growth over between January of 2021 and December of 2021 of 27%.
Why is that so important? Just like you said, sir, it's so that people don't defect at month six to seven . This is the stickiest cohort that we have. If you're engaged with the software daily, you're not going anywhere 'cause it's truly interwoven into the way that you do business on a day-to-day basis. That's why we focus so much on early engagement and engagement over time. Now, how does that help us as a business? Joe alluded to this earlier. 1.5% seasoned churn. Now, you may say, "Well, what does seasoned mean?" Well, what we also spoke about earlier was the fact that small businesses, they behave a little bit differently than enterprise-level businesses. They're more volatile. They're more prone to seasonality. They're also more prone to let urgent get in the way of what's important. What's important is modernizing their business.
What's urgent is maybe the flat tire that just occurred down the road for one of their employees. What you find is that similar to, like, if you join a gym and get a great personal trainer, but you never show up? Can the personal trainer help you? Will you get the rock hard abs that you seek? No, not at all, right? We count people that are with us 366 days or greater, who have given us the opportunity, who have worked with us, who are still in business. We believe that's a more fair and accurate depiction of churn, given the classification that we serve. As you can imagine, when you bring churn down and you deliver a great experience and add additional products and services, your net dollar retention raises.
Over the course of 2021, we saw an increase from 90% to 94%, which we're very proud of, but we're not stopping there. The last metric that I do wanna share is relationship NPS. This is sort of a higher level of NPS. This, many people consider to be the best predictor of future success. This is the look back at 12 months. All of the interactions that somebody's had with you over the course of 12 months, we survey those people, and we ask them how likely they are to refer Thryv to a friend or family member. We've grown that from a +8 in 2020 to a +20 over the course of one single year, and that is impressive. You may be saying, "Well, +20?
I've heard of Ritz-Carlton and that and, you know, Nordstrom and the +80, +90. That's B to C. Consider the segment that we serve. This is B to B, and the second B there is small business America. This is industry-leading service and NPS for our category. With the time left, I did wanna talk a little bit more about Ronnie and her mom, Anne, and their journey with us, 'cause I think it's important that everybody in the room understand the plight, the trials, and the tribulations that small businesses face and why we chose service as a differentiator. In 2018, they started this business in their garage, okay? Now, we didn't know them when they started their business. We got involved with them once they had a small retail location. But in many aspects, they thought they were still in their garage.
I mean, Ronnie's had a mirror behind her desk, and it's all Post-it notes. A call would come in, Ronnie would answer it, hand it to her 65-, 70-year-old mom, who would write stuff down on a Post-it note and put it up there, right? They also didn't have a website. As you know from Ryan's presentation, we were able to build them a best-in-class website, because you know what their ultimate dream was? In their local area in Rhode Island, they wanted to compete with Petco and Petland for grooming services. We suggested a website and no more Post-it notes. It's a great way to start that endeavor to go against somebody like that. We got them a best-in-class website, and we hooked them up with Amanda Vick.
Amanda is one of our client success partners who would handle account management, and then growth as well. After we built them that website, we move into 2019, and this is where we really started to work with them, to coach them, inspire them to use the software and get out of the Post-it business. We have them start using the CRM, so now they had a digital client list that they could segment and they could market to in different fashions based on the products and services that they buy or that they should buy. We had them light up the calendar, as mentioned before, so that we could stop the no-shows and make it easier to understand what dog is coming in and when and for what.
We started to help them start using documents because they needed to keep vaccination records and keeping it in paper and drawers everywhere wasn't really an option if you wanna grow, if you wanna scale, which they were dying to do. Had them set up the client portal facet of Thryv, where now their clients can come in and see if they owe money, see when their next appointment is, buy packages, et cetera. Then finally, 2019, the most banner thing that we did was help them with their social media, and that became vital. Having a good social footprint across Facebook and across Instagram became vital because we all know what happened in 2020. Imagine being this small business in the middle of Rhode Island and all of a sudden COVID hits, and now your shop's empty and nobody's allowed in.
Imagine what they were feeling and what they were facing at that moment. You know, one of the first calls they made was to Amanda, who picked up the phone, and they brainstormed how they could intelligently use the software given the current conditions of the market. Meaning no more contact for payment, no more cash right now, no more handing me a check, no more handing me a credit card. We had to go to contactless payment, so we started doing that. More exchange of all documents necessary to perform the tasks needed in their business, which meant attaching Jotform to make that seamless. In addition to that, email and text marketing became vital.
Thank goodness we had built that digital client list, right, in the CRM and noted the services they had and began to segment it, because now if you can't come to our place, we got to figure this out. They would send out email marketing communications, text communications to clients with a drop-off method where people would drive up to their door, Ronnie would come out with a mask and gloves on, get the dog, bring it inside, and they would text them when they were back. All of that texting was done through our centralized inbox, so that there's a record of all the communications and the services provided. They also started using packages, right? What do you mean by packages? Packages where they would sell groups, bundles with pay in advance, which really helped their cash flow at that moment, and would give discounts for that as well.
One of the coolest things that they did was they would go to a park, and before they went, a week before they went, and then three days before, and then the day of, they would send out an email blast and text reminders to all of their local customers saying, "Hey, we're gonna be setting up in this park in such and such Rhode Island. We're gonna have a trailer there, and we're gonna do nail clippings and dog clippings for $25 special." The people came in droves to have that done. We helped them adapt and to survive and to thrive during one of the most difficult periods, where I am confident if they still had Post-it notes and pencils, they wouldn't be in business today. Instead, they're doing extremely well.
In 2021, they actually closed the retail location. They decided to go mobile 'cause of the success with the parks, and they have the dog trailers you've all seen, right? They come to your house. They groom your dogs at your house. They have two of those now in Rhode Island. Oh, and by the way, in Virginia as well. Their success story is our success story. That's what makes this symbiotic relationship so beautiful in so many ways. Because if you take a look at where they are now, when they started with us, they had under 100 clients. Now their CRM has 4,600 customers in it in just the span of a few years. When Joe says that Thryv promotes growth, it absolutely does. Look at the impact it had with us. When they win, we win.
Over the course of that time, Ronnie, her mom, Anne, and Diva Dog, they now spend 7 times more than us than they did at the inception, and that doesn't even count the referral that they gave us that now spends an equal amount to them. Service pays. It's a great differentiator to have. It endears people to you for the long term, and when they win, we win, and that's the way that we want it. With that, I think it's my turn to accept some questions. Or not.
Sorry.
Yes, sir.
Real quick. We're gonna take Arjun right here. You see the microphone.
Sorry. Thanks. Grant, just one question about your organization. When you think about the talent pipeline, it seems like there's two sources. One is the marketing services folks that are being retrained in the SaaS business and then net new SaaS hires. Can you help break that down for us how much is coming from the marketing services side? Maybe just help us understand some of the pros and cons, like how long does it take to retrain? Who, you know, who's more quickly getting up to speed on selling the SaaS business? Just walk us through some of that dynamic, please.
Yeah, absolutely. Start with the local sales force. It's one of our. It's maybe our biggest competitive advantage that we have. As far as retraining, the vast majority of them have been retrained. They're really good at the software. They're good enough to be dangerous. But by coupling them with one of the software sales team members, the one plus one equals three, because they're able to give a more efficient, more consistent demo that focuses on the needs of that business. But the local salesperson, they own the relationship. Remember, Joe spoke before, and you'll hear our CRO say this all the time, the toughest thing to get is a conversation. By having them focus on those relationships and bringing in the right person, like a software sales team member to sell them the right product, it really helps.
As far as transformation, that is sort of done. They are adept with the software. The people that come in straight into the ranks of sort of demand gen. Most of them didn't have any background in marketing services or years of doing that. They come in typically as a sales development rep, as you can imagine, and they cut their teeth on really bad leads and then move up to the other ones and move into the realm of sales as well. That process, we really have it streamlined. We're really efficient with making cookies, as you'd say, making top performers. You're talking about 60-90 days, and they're fully efficient already, which is pretty good. Does that answer your question?
Very helpful.
Okay.
Hi, Richard Fells from Odeon Capital Group. The sales and service setup is really great, 1,000 employees touching and engaging with clients. Talk to us about retention, because everybody's feeling that. Talk to us about how you can leverage these very high marks that you have for sales and service to create an even larger sales machine, because you're gonna need a larger sales machine.
Mm-hmm.
to achieve that growth.
Yeah, great question. I also think in addition to a larger sales machine, there's additional points across the journey where revenue can be generated that we're not maximizing now, so that it doesn't always have to come down to a larger sales machine. In addition to that, with the product-led growth stuff that's coming into play, there's gonna be a lot more over the coming years of adopt then buy, where people adopt a product to some extent and then purchase additional bells and whistles for said product. I think that it's not necessarily massive growth in the realms of salespeople. It's making them more proficient and efficient with the time that they have to spend.
In addition to the continued investment in things like demand gen, in the franchise channel, in partner and affiliate as well, coupled with product-led growth. I think that's where you'll really see the expansion in sales.
What about retention of existing employees?
It's a great question. We try to compensate well. Obviously, it starts there. We're also on a mission together. A lot of these people aren't brand new. They love small businesses, and they love the stories of the Ronnies and the Annes and the Diva Dogs of the world. It really keeps them going. I think we have a tremendous culture, one that's winning, one that rewards people for the right behaviors. I also think that a lot of our employees know that the next opportunity isn't necessarily the best thing. They have big hopes, big dreams, and big beliefs for where we're going and the trajectory that we're on, where the grass doesn't look greener elsewhere.
We've got what we need right here for employees to grow their careers, and we invest a lot in them as well.
Okay, we're gonna cut it there.
Excellent. Right. Thank you very much for that time. We're gonna now watch a video, one of our really happy enterprise, excuse me, franchise-level customers, who talks about the success that they've had with our software.
I'm a firm believer that you have to be easy to do business with. You know, and ultimately, that starts with the end consumer, our homeowners. As the franchisor, I need it to be easy for the franchisees to do business with us. You know, I had a franchisee tell me last week, she said, "This is the most intuitive program I've ever learned, and I can't believe how easy this was." It gives the franchisor the ability to help identify where the franchisee needs assistance. Then if they're off course, like, what can we help them with to get them on course, right? This gives us the ability to identify that quickly. Thryv really understands the challenges of getting franchise partners to adopt a new system. With Garage Kings, they developed a personalized and successful onboarding experience.
Grant, that was incredible how you documented the client journey and that energy. You kind of set a high bar for me. You couldn't trip or something like that, you know, make me look good? Okay, hello, my Zoom friends. It's so nice to meet in person and shake your hands. I saw you looking at me. You thought I was taller, right? I make up for it with personality. Okay, nobody likes a funny CFO. Let's keep moving here. We are very proud of our strong track record of creating long-term shareholder value. As you heard throughout this presentation, we continue to innovate and deliver. We strive to make all surprises positive. We strive to deliver on what we say we're gonna do. Well, it's pretty obvious to everyone, we're not your typical SaaS company.
We are two businesses that complement each other very well. A highly profitable marketing services business that provides cash flow and customers to feed our fast-growing SaaS business, and in turn, new customers for our marketing services business, a virtuous circle. This is our unfair advantage. This is our superpower. I'm pressing this button. Okay. Marketing services. The marketing services business always reminds me of Mark Twain's quote, "The rumor of my death has been greatly exaggerated." As Joe outlined, this business still has a lot of life left in it, more than most give us credit for. While in decline, it is a slow, steady, predictable decline like a metronome. While I may look young, certainly younger than Grant. Okay, okay. The team and I have been around the business a very long time.
We know these markets and the small businesses better than anyone, which allows us to manage the business to very high margins. The strong visibility into future revenues and cash flows enables us to manage our cost structure to deliver strong margins. To illustrate the point. We heard a lot about innovation, the software business, and our go-to-market strategy. As Peter Drucker said, "Innovate or die." We have brought innovation to our print product side where the business, we published over 1,500 directories in 2021. For example, extending the life of the directory. We are constantly adjusting and reacting to our markets. Through this directory, we've moved our directories from 12 months to 15 months to 18 months without disrupting the business.
What happens when you do that, you actually extend the cash flows of each directory and the profitability. We do that at no additional cost. It leads to predictable cash flows and higher margins. These extensions also open gaps in the selling cycle, to your question, that allows our sales force to sell at no additional cost 'cause their time has opened up to sell to our customers. It's the gift that keeps on giving. Oh. So much for the notes. Okay. Seems like my first rodeo. 2021 was a very strong year. We expect 2022 to be an equally strong year. The investments we are making in go-to-market and product-led growth are paying off and has positioned us for durable revenue growth well into the future. Let's deconstruct this a bit.
2021, we focused on ARPU expansion, growing our client annual spend to $4,000 annually as we focused on our ideal client profile. We believe there are still gas in the tank to continue to grow ARPU over time as we execute to the product roadmap. As Grant said, or Rashida said, we are adding clients and growing with them, deepening our monetization along the way. You might be asking, "How are you thinking about subscriber growth?" Well, with low churn behind us now, we expect more balance between subscriber growth and ARPU expansion, which is reflected in our 2022 revenue guidance. We feel. Can I just move forward? Okay.
We feel confident that our subscriber growth will grow into the double digits because of all the advancement in our product innovation that Ryan described and the strength of our team selling that Grant described, boosted by the jet fuel of the addition of Sensis and Vivial, our new subs. You might be asking, how are you thinking about margins? In 2021, our overall SaaS platform gross margin was around 70%. When you blend in the add-on products, the margins blend to the mid-60s%. As we introduce planned margin-rich products, such as Marketing Center, and following the product roadmap that Ryan described, we expect margins to move into the mid-70s%. As Joe reminded, and I wanna remind you one more time, we were a profitable SaaS company prior to 2021, so we know how to do that.
We have purposely decided to thoughtfully invest in our product roadmap that will lead to higher revenues and profitability in the future. The best of times are ahead. With that's. I'm concluding my portion of the presentation, and I wanna introduce my partner, my friend, and all around great guy, KJ Christopher.
Thank you, Paul. I'm one of the newest members of the team here. Just started working with Thryv in 2017. Very excited to join this team. It's been an exciting time since I started. I do wanna start off by just actually making a note. It's like we're almost there, only a few more slides left. I'm gonna start off just talking about this team. As Joe mentioned earlier, lots of acquisitions, history of very accretive acquisitions. Now, how do you deliver that? Well, practice. I think, Joe, you said 77 acquisitions.
You know, you do it often enough, and you get really good at strategically looking at your targets, coming up with a plan, diligently sticking to the plan, not getting red mist in the middle of a deal, and just executing. There's another helping hand, though. Marketing services companies respond very well to scale. When you're as big as we are, that leaves the door open to lots of post-acquisition synergies. Let's focus on recent history now, not all 77 of them. Go back to 2017, YP Holdings. That's the one that took us coast to coast, made the company much bigger. Huge increase in cash flow at a time when we were transitioning. After synergies, 2x EBITDA. Last year, Sensis. This one opened the door to international expansion.
Immediate access to 100,000 customers that had deep relationships with a well-respected company. 2x EBITDA post synergies. Just last month, I guess a few months ago now in January, we just announced this Vivial. Small acquisition here in the U.S. It filled in the last remaining markets we had in the U.S. 2x EBITDA, again, post synergies. The nice thing here, access to 25,000 digital clients right in our own backyard. All right, nothing speaks louder than history, right? This is a slide that Joe mentioned earlier. While we were building a SaaS company, at the same time, we delivered $1.5 billion to our stakeholders. That doesn't happen by accident, right? I took over this job. Paul came to me and said, "Hey, I got two rules. In fact, you should think of them as commandments. Paul, you wanna share those commandments here with everyone?
Commandment number one, thou shall pay down debt. Commandment number two, see commandment number one.
It's kind of evident here, right? I mean, obviously, we had de-levered strategic acquisition, YP. De-lever, tender offer, dividends. De-lever, another strategic acquisition. We have a long history of good cash flow, good debt-to-EBITDA ratios, and staying well south of our covenants. We're gonna transition now to a quick video about one of our Australian clients, and then we'll all come back up to the stage for the big Q&A.
My name's David Webb, and I'm the Director of Breakwater Kitchens. The business was established in 1985 by Alvaro and Maria Del Gullo. In 2013, they decided that they were gonna start up a plan to pass on the business to one of their employees, and I was lucky enough to be that employee. What we make is kitchens mainly, but we do whatever anyone would like us to do. Potential clients would call us up, and we would have to physically write down that information for them and hope that we got all the information correct. The challenges that we faced having to look to find a better solution was we were missing appointments or we were late to appointments. The way things have changed since the implementation of Thryv is that we've increased our time.
We're seeing more work, which means we've increased our sales measurably around about 7% over the year since implementing it. Our receptionist, having to spend so much time managing our diary, has now had her own personal self-development because her time is freed up. She's increased our productivity and our sales just by having Thryv. Thryv has been really important in sending reminders saying, "You need to be here. You need to do this." That has been the biggest saver for me. Thryv had helped guided our journey through our work life by clients having the ability to input their own data into it, so we've freed up time. We use it for so many different systems, seeing appointment bookings or social media, which is really, really important to us. Without this system, we just couldn't continue.
Happy to take questions if some are left that we didn't cover. Here comes the microphone.
Howard.
As a reminder, please state your name and your firm, please.
Howard Amster, Ramat Securities. I guess my first question is when you talked about the eighteen-month cycle, if I was a customer, I would be billed like one and a half times what I had been billed when I was at twelve months. Is that correct?
Well, we sell the product, always have, for a century as a monthly service. When we took the company over in 2014, the directory's published 12 months, so you bought and you paid 12 months. Now you pay the same price monthly, but over the last period of time, as we had to innovate the print product, we've extended its life gradually. We went to 13 months, 14, 15, 18. The reason we've done that is it's allowed us to continue to publish really high-quality directories. We're the only really provider out there. It's also been really environmentally well-received. You as a customer, if you were spending, you know, $500 a month for your program, you know, you're likely spending $500 a month now or maybe even less for your program.
It delivers the same power and the same bang for the buck. We don't find that the consumers run to the driveway and say, "Is the phone book here yet?" You know that exactly when it comes out is not a big issue. For the areas where it's seasonal, some of those directories, you know, have to come out at a certain time. We have them come out at the same time, and often that's every other year, but they come out at that seasonal time when people set up their shop for the year.
The customer is paying approximately the same amount per month, as he was when.
Yes. One of the things that I maybe didn't spend enough time on as I talked about the directory part of the business is the way we've repriced the book over the years. We've actually brought the rates, the amount that you pay to be in the book way down as we've sharpened the target on the end user that actually is using the book. That's part of why the bang for the buck is so strong.
Okay, I had another question. In your guidance, you showed the EBITDA for the year on the SaaS product being about $20, say an average of $23 million loss. But for the first quarter, it's $12-$13. It's like over half of the number. Is this business gonna be more profitable as you get into the second and third and fourth quarters? Is that what you're saying?
Yeah. We're very comfortable with the guidance that we gave on where EBITDA will be for the year. We front loaded some of the investment. Some of the things to get Marketing Center out and some of the other big initiatives that we've done, we front loaded in the beginning of the year.
Just two more questions. Last year, what was the cash flow around $300 million, $270 million that you were able to either pay debt down with? Is that approximately correct?
Yeah, that's about right.
This year, the numbers should be about approximately the same?
We haven't guided on cash flow for 2022.
like interest expense will be down, for example.
Interest expense will be down. Just in general, the free cash flow will be less in this year. It's not something we've guided to.
Okay. I'm gonna have some more questions. Can I ask another?
Yes. Yep. Obviously, the IR team's available to help you with detailed modeling questions.
Yeah.
Let's try to keep these pretty high level on the product presentation.
Dan Moore from CJS Securities again. You described the history of M&A as being, you know, obviously critical to the growth. Everything here has been organic. Up until recently, it was mostly marketing services buying Sensis, and then we sort of started to talk about M&A on the SaaS side. Maybe just from where we sit today, what is the M&A strategy? Are you still looking at both opportunities? How do you see that playing out over the next two to three years? Thanks.
The entire plan we laid out for you today was organic growth. It doesn't assume or imagine any acquisitions. As has been documented, we have made, as a team, upwards of 100 acquisitions in our time together, and we're pretty disciplined about what we pay and pretty good at how we integrate those acquisitions. We have interest in SaaS acquisitions over time. We have people that are in our App Store that potentially you could, you know, say, "Hey, we'll, you know, bring them in." Right now we don't have a SaaS valuation for our company. To make a SaaS acquisition would be quite dilutive for us. That's something that might occur as we grow into our full valuation. At the moment, this plan doesn't assume any items. You're not, this is not a roll-up.
We're not planning to buy things. If opportunistically, we can hit things at our price point, and we feel we can get a speedy return on capital, we'll do it.
Hi, Scott Berg again here with Needham. I wanted to focus on the commentary about product-led growth and kind of how that sales motion will evolve over the next four or five, you know, plus years. You know, there's a lot in there. You know, that motion's just different. How should we think about kind of the... I guess it's a two-part question. One, the mechanics of the individuals you have on the team now, are they able to make that transition, or do you maybe make wholesale changes on the, I don't know, the type of personnel that you bring in, maybe sales leader, et cetera? Because it is a different mindset than what you're doing today. How should we think about maybe the productivity of those sales teams?
I like the product-led sales model because it tends to be often, you know, digital. When I think about customer acquisition costs, it tends to be a lower cost channel than some of the, you know, personnel-driven sales that you do today is. Does that add some, I don't know, additional fuel to the sales growth engine 'cause you don't have to invest, you know, in the people personnel maybe quite as hard?
Yes. You've put your finger on it exactly right. I mean, we have a very big customer base, and it's referring lots of people. To realize our full growth vision, we need to be able to work well outside that zoo. Product-led growth is a strategy for causing people to raise their hand and say, "I'm somebody that you should spend time with because I'm interested in this." In terms of the way we're developing the organization, I'd like Ryan to talk about some of the recruiting he's been doing around product-led growth and some of the talent he's been acquiring.
Yeah. Great question. Yes. We're on the product side, specifically targeting, and we recently, you know, added some key talent to the organization, specifically focused on product-led growth and the nuances inside the product. When we think about product-led growth, I think it's important to understand that includes product-led acquisition and product-led expansion. We view those as really complementary to our sales efforts. It makes them significantly more efficient. Someone who's already engaged in the product in some form or fashion provides a whole host of data points so that our sales team is really focusing their time and energy on upselling into products that garner a higher average ticket price for those.
Whereas incremental add-ons inside the product add added seats or other features of products should really be done inside the product in the cover of night, 24/7 without a salesperson having to engage there. We are keenly focused on adding the right skill sets and talent to make that shift. Again, we think the skill set on the sales side will really just be they get more qualified people presented to them with more data points with a higher propensity to close.
I just wanna make sure we're clear. We're layering that in in addition. We're not switching. We aren't gonna. You know, our sales force is doing really well. Productivity is growing to the point where we actually you know, where in the past, if you look at our life the last six or seven years, our sales force has shrunk every year. We've stopped shrinking it. We're beginning to actually lean into growing it a little bit. Layering in product-led growth gives us another vector of growth.
Hi, this is Chapin Clark with J.P. Morgan. I'm just wondering if you could go into the breakdown of fixed costs, and variable costs in your marketing business and how you plan to maintain the 35% margins as the business gets significantly smaller.
The business has already gotten significantly smaller. I mean, at one time it was, you know, billions. We're variabilizing every cost up and down the ledger of costs. We very carefully thought through that 10-year model and how it plays out, and we're comfortable with that mid-30s% margin. You know, we know in advance what the revenue's gonna be the next year. We even know in advance what the revenue's gonna be the following year, and we are able to set a plan for how much sales resource we're gonna deploy, how many people sit behind that processing the orders, every piece of it. Every year, we further retarget the directories because the demographic of people who use the directories is ever so slightly shrinking every year. We're targeting who we deliver the directory to.
Every cost up and down the line, you know, is attached to how much demand there is, how much revenue there is. We view it as fully variabilized. One other thing, if you're having a hard time imagining that, keep in mind that as the SaaS business is growing, it's carrying a greater piece of the general overhead, like a piece of my salary or Paul's, which is very high.
Arjun Bhatia, William Blair. Joe, I think initially you had laid out the 10-year plan to get the print business to be $100 million by 2032, if I remember right. At that point, you're gonna be at a $4 billion SaaS business. What is, at that point, the benefit of having the print business still in play? What are some of the intangibles 10 years down the line that may still help Thryv overall?
Well, I love the way you asked that question, because if you go back and you look at that visual, the print is actually about $15 million of that $100 million at that point. The $100 million is the marketing services business in general. Our marketing services business is really complementary to our SaaS business because, you know, these small businesses need to get more customers. It does just fit beautifully together. Arjun, there's one other way to think about it. Who would buy it? You know, there's no market for it. You know, it's worth a lot more to us than it is to somebody else. Well, you know, you should spin it off somehow. You, we've had that discussion. We didn't have it publicly on earnings calls.
We really feel like it's vastly more valuable to us. I mean, just look, for example, at the Sensis acquisition. We made that acquisition 13 months ago. Sitting here today, we've gotten almost all of our capital back already, and we own this big, thriving business with a fast-growing SaaS and a big marketing services business. You know, it's extremely valuable to us because we know how to use it and how to fit it together. We haven't seen anybody else out there for whom it's valuable. I don't think there's a great, you know, demand for separating it.
Thank you.
Hi, Natalie from Wasatch. I guess with the shift to more of the Business Center model, maybe take us from a SMB customer perspective. I know you guys had a marketing tab within the existing solution. From an SMB customer's perspective, how am I perceiving what this new marketing hub is offering to me that I didn't see before?
Mario, why don't you lead us on that one?
Yeah, absolutely. Business Center includes some basic, you know, marketing activities, primarily focused around email and text marketing, the nurtures, the automatic reminders, things that invite people to come back to your business again and again. Marketing Center really is now a shift of added functionality that allows them deeper analytics. Today, as an SMB in our platform, you're asking me to, you know, talk you through the journey. You log in, and you see website analytics, and it says you have, you know, 2,000 visitors this past month, and 20% are existing, you know, return visitors and 80% are new. That's all you get. You just kind of know traffic. I guess next month success would be more than last month, right? That's kind of the way that they think about it.
Marketing Center really is meant to arm them with data and analytics to allow them to go get more customers, but to do so on a level playing field with big companies. Big companies are spending $ millions in MarTech and other technology to kinda make informed decisions, and small businesses, therefore, are at a disadvantage. Marketing Center is an extension on that platform that allows them to really get incredible insights and make great better decisions.
Final question is just, as you guys pivot more to the Business Center model, how are you guys thinking about how the monetization of the product needs to change relative to the monthly plans that you have set up today?
In all of our centers, we're focused on, generally speaking, and I say generally, we, you know, obviously, the centers that are a little farther out, we do extensive market research to understand ideal price points, optimal value, price band ranges. But we are generally thinking about good, better, best, and then every single center has a component of usage-based billing. You're seeing that a little bit with ThryvPay. We have some other things, seats, other ideas, with the idea of tying their growth, as Grant eloquently shared with you, that their success is our success. If we can tie the billing and the revenue really so we don't even call it spend. They grow, we make more revenue. That's our direction. All of our centers we're focused on that strategy.
Yeah, I mean, the pay-as-you-use-it model is a great model for this. We weren't able to start that way because when we started, we were trying to support 2,000 salespeople and 400,000 customers, and the sale needed to be meaty enough to send a human being out there to make it. As we keep moving well beyond and as the market continues to develop, our ability to add that in is very real.
Okay. Hey, Joe. Rob Davis from ACK. If I could just ask, as you look at the business in 2027, the SaaS business with $1 billion in revenue, can you profile what it looks like compared to today? For instance, I'm thinking today there's three strong verticals. A small portion goes through ThryvPay. You do a large portion of the payments through your system in general. Like, how do we think about, is this many more verticals? Is the franchise business a very large portion of the pie? Just how the business differs in five years versus what we know of it today. Thank you.
Thank you. We've tried to lay out in today's presentation a bunch of different sort of vectors or paths for growth. One that maybe we didn't spend a lot of time on was international, but we really feel like much of what we're doing here we'll be able to do as the international markets that we're targeting develop. I think I would say if I were trying to contrast the 27 business with the 22 business that we've presented and guided to, one of the biggest differences I think that would jump out at you is revenue coming from markets and countries that we're actually not in yet or ones that we've recently entered that are growing.
In terms of here in the U.S., I mean, we at the rate at which we're signing new franchise multi-location businesses, we're pretty comfortable with the guidance that was in the presentation for, you know, where we'll be going out. The work that we're doing around partners and affiliates is bubbling up and starting to be meaningful. When we look at that sort of on a kind of a timeline, we think that will get to be bigger. Kinda each piece, I think, grows, but the biggest contrast I would say would be, you know, the international overlay, where there's virtually nothing there, and there'll be really significant element there. You know, if you think about the TAM that we've described and expressed, we think we can be a double-digit market share owner in a very big, very fast-growing, very dynamic market.
Hello, Corey Miller from PNC. When referencing or referring to the international expansion, is there a specific country or market that you guys are focusing on? As part of that expansion, is that more so hiring reps to kind of work out of those countries, or is that some of that attributed to M&A similar to what was done with Sensis?
We do believe that there are potentially opportunities for us to do what we did with Sensis in other places. It's not built into our model. That's not in the forecast. We do think that there will be some of those opportunities. We're particularly skilled at acquiring these businesses, integrating them, and they respond really well to scale. The ability to bring these marketing services type businesses onto our platform is extremely synergistic, which makes potentially some of these assets more valuable to us than they are to the current owners. There aren't a lot of people swarming to buy declining businesses. In terms of specific additional countries, I'd really not like to outline any more countries at the moment. We're in Canada and Australia. Those are really developing nicely.
We're very pleased with the progress that we're making there. We have others that we plan to go into. I think what we'll do is we'll probably take, like, two more, and then we'll wrap.
Oh, great. Hey, Zach Cummins from B. Riley Securities. Thanks again for doing the event today and really outlining the opportunity. Joe, when you're looking out 5-10 years and sustaining this sort of growth trajectory for the SaaS business, what do you view as the greatest challenge or multiple challenges that you could face to sustain this sort of growth trajectory over a multiyear timeframe?
I mean, I think that at the start of it, you know, we had. To say a constrained capital structure would be probably an understatement if you think of where we came from as a distressed asset, and we've been working our way through. You know, today we still don't have just loads and loads of options. We don't have lots of dry powder we can go do anything we want with, but we're working our way through. You know, we were more than 80% sort of distressed debt controlled when we emerged as a public company 18 months ago, and today that's well under 30% and falling fast. We're working our way through. We're finding new shareholders. We're finding new people that are interested in the three, five, seven-year plan here.
I think that is the big part of the journey that's not just a layup. That's not just automatic. We've got to do some work and tell our story to make that happen. In terms of, you know, operationally in the business, you know what? I've got a team of people who've run very big businesses before, bigger than this one, and understand how to scale and how to grow. That experience is there. Pretty comfortable with that. Competitively, I mean, obviously, we've been in an environment where there's a lot of, you know, kind of money chasing any idea, whether it's a good idea or a bad idea, chasing these ideas, so you see a lot of competitive things.
You know, the different cycles that we're probably looking at in the future might actually be helpful for, you know, sorting some of that out, might serve up some opportunities for efficient M&A for us. I would say that, you know, like, that capital structure thing would be the thing that I would say where it's not a layup. We have to work at that to make sure that we've got the kind of investor support that understand our vision and our plan and wanna get behind it.
You know, one of the things that I've noticed is the competition for top engineering talent, especially with FAANG, and their ability to pay top dollars. How do you compete for top talent? Then if I could squeeze in one more, which is the implied growth rate on the SaaS side is about 40% from 2022 to 2027, and I've noticed that you guided to about 20%-22% growth for 2022. If you could just comment on that, like, why that sudden acceleration of that magnitude for the next five years after 2022? Thank you.
Yeah. I mean, as a business, we were on a harvest footing until, you know, less than two years ago. When I looked around the board table, I was looking at distressed debt guys all around the table saying, "Show me the money. How come the SaaS business doesn't have as high a margins as the Yellow Pages business?" I mean, these were the conversations we were having in the boardroom. We made the decision to list the company. We went through a direct listing process, and as a part of that, we re-peopled the board with a whole different set of questions that were being asked around the board table.
We've had a little catching up to do to, you know, make some investments in our engineering talent, our product development team, and that's been going on. I'm delighted to say that people are excited about this mission that we're on. Helping these local businesses matters to people, and we've been able to find people that share that vision and wanna be a part of it. It's also impressive how many people that were in the marketing services side of the house, who were young maybe, people excited about, you know, the future and believed in this, who re-skilled themselves and transitioned over. We provided a lot of training and development.
There are people here demoing to you that came out of the marketing services side who are now experts in SaaS, and they made that transition, and we're, you know, we're really proud of that and proud of, you know, the people-focused kind of business that we have. It's been a blend of those things. We are out in the market doing some recruiting because we wanted to bring in some fresh thinking and ideas, but a lot of it is people that have been in this prior organization that are transitioning, you know, for the growth side. I'm gonna wrap this up there, and I'm gonna thank everybody for coming. Really, really appreciate it. I know you have more questions.
We'll hang around and take more, and as a lot of your modeling questions, our investor relations department will be glad to help you with. Thank you so much for attending today.
Yeah. Thank you.