THRY - NASDAQ

Thank you for standing by. My name is Celine and I will be your conference operator today. At this time, I would like to welcome everyone to the Thryv First Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Mr. Cameron Lessard. Please go ahead.

Good morning and thank you for joining us for Thryv's first quarter 2025 earnings conference call. With me today are Joe Walsh, Chairman and Chief Executive Officer; Grant Freeman, President; and Paul Rouse, Chief Financial Officer. During this call, we will make forward-looking statements that are subject to various risks and uncertainties. Actual results may differ materially from these statements. A discussion of these risks and uncertainties is included in our earnings release and SEC filings. Today's presentation will also include non-GAAP financial measures which should be considered in addition to but not as a substitute for our GAAP results. Reconciliations of these measures can be found in our earnings release. As a reminder on this call SaaS revenue reflects the combined performance of Thryv and Keap. We will only specify Keap's performance when discussing its revenue contribution for the quarter and fiscal year. With that I'll turn the call over to Joe Walsh, Chairman and CEO.

Thank you, Cameron and good morning, everyone. Thryv started 2025 on really good footing just continuing the momentum that we had in 2024. And for the first quarter, we delivered both the top and bottom-line guidance beat. So we're really proud of that. Our execution has been excellent. Our team are working really hard to develop additional products and build additional services and the marketplace is responding well to them. So pretty happy with what's happening with Thryv as we continue to develop as a software platform. When we look at the actual results for the first quarter, we had 50% year-over-year revenue growth. And when you normalize for the Keap acquisition we had 24% growth. So SaaS EBITDA margin expanded to 10%. SaaS revenue is now 61% of revenue for this quarter. So if you think about that we are transforming this business from marketing services to SaaS. And I know there are a lot of people waiting for us to become completely SaaS. We're just about there. I mean we're majority SaaS revenue now and that's a big milestone for us as a business. Another thing that happened is our ARPU increased. $335 a month was the ARPU that we delivered up nicely from the last period. I think you're going to see that trend throughout this year as we continue to go back to existing customers and add more products on. Our season net revenue retention reflected that motion too 103%. So pretty solid outcome there for net revenue retention. We're pleased with that. Subscriber growth was 37% bringing the Thryv total to 96,000. And if you include the Keap subscribers in there, it's 111,000 overall. One of the key drivers in acquiring Keap was the partner channel. They have an excellent partner channel. They've been at it for a long time. A few weeks ago I was able to attend our Partnerkon Conference out in Arizona which was a combined Thryv and Keap partner conference with more than 100 of our partners in attendance some from as far away as Europe and Australia. It was great to have a chance to talk to them about what they're thinking. And what they're thinking is they want to sell the full Thryv product catalog. The idea that they can add the top of the funnel where Thryv is really good at helping you build your list helping you meet new customers, helping you be found to the very strong Keap products in the middle and bottom of the funnel where you nurture your list and convert sales and then follow up post-sale for more business in the future kind of gives them a more complete marketing funnel. And they feel like it's going to help them grow their business and that they're excited about that. So it gives me a lot of hope for what 2026 and 2027 are going to look like in terms of us beginning to really build out that partner channel as they have the full catalog of Thryv and Keep products to sell. So to tell you more about the progress of our business I'm going to bring Grant Freeman on our President. Grant?

Thanks, Joe, and thank you all for joining us. In 2025, we're entering a new chapter of growth for our SaaS business. Many of you have tracked our progress cross-selling and upgrading marketing services customers to SaaS products. As you probably know, most of the legacy customers we converted to SaaS were upgraded to our Marketing Center product, which, as you probably remember, helps clients boost their online presence, gives them lead attribution tools so they know what marketing and advertising is working and also helps them manage their social media posting across multiple platforms in addition to other features that are tied to growth. Our sales strategy will remain focused on growing our SaaS subscriber base through upgrades, cross-sells and new sales. Of course, our most efficient path forward is deepening relationships within our existing software base and expanding their spend. As of the end of the first quarter, 17.2% of our SaaS subscribers use multiple paid products, a nice increase from where we were. As we've analyzed retention trends across our customer base, one thing has become glaringly clear, expansion within our existing clients is one of our most compelling opportunities. When a customer adopts a second paid product, their churn rate drops significantly. Recently, we see it dropping as much as in half compared to just those with one product. Not only does this increase revenue per account, but it dramatically extends customer lifetime, making expansion a far more efficient growth lever than relying solely on net new customer acquisition. At the start of the year, we reoriented our sales organization around growing monthly recurring revenue rather than prioritizing new account acquisition. Each business adviser now manages a large book of business with improved cadences, better automations and enablement tools to help the rep efficiently increase average spend for each account. The result is a more consultative value-led approach that has meaningfully improved per rep productivity in recent quarters. This shift was deliberate and the results are really encouraging. We did things like overhauling the compensation to reward MRR and expansion. We've encouraged reps to focus less narrowly on selling individual centers and more broadly on selling the full scope of SaaS solutions that may benefit a given customer, and we encourage reps to focus on existing customers where wallet share expansion is more efficient. The strategy is working. Our productivity is improving. And importantly, we spend less to acquire higher quality growth from within our existing SaaS client base. Customers are responding positively to our growth-oriented tools like Marketing Center, Growth Packages and other customer acquisition add-ons that we offer. These products serve as a natural springboard for introducing CRM and workflow automation later on in the journey. We're also seeing encouraging results moving upmarket with modestly growing average customer size and higher ACVs through more consultative sales approaches and multi-center deals. This is particularly important as we go deeper into specific verticals and higher-performing SMB segments. Maybe what's most gratifying is that our clients are happy, and they are bringing their friends to learn about our platform. So we have a large referral flow. As such, a large portion of our new clients come via these referrals, which continues to be a strong motion for our business advisers. On the product side, we built five robust centers and added more product to bring to market with the introduction of Keap Automation. This phase focuses on deepening adoption rather than just expanding subscribers. Finally, Keap provides strategic advantages through its automation engine, its partner network and R&D capabilities. We're just beginning to explore cross-selling opportunities between our customer bases. And at the end of the day, when we help clients do more, they stay longer, creating compounding growth. And with that, I'd like to introduce Mr. Paul Rouse.

Thanks, Grant. Let's dive into the numbers. SaaS reported revenue was $111.1 million in the first quarter and above guidance, representing an increase of 50% year-over-year and up 7% sequentially. Keap contributed $18.9 million in the first quarter. Excluding Keap, Thryv SaaS business grew 24% year-over-year. SaaS adjusted gross margin increased 490 basis points year-over-year, reaching 73%. The first quarter total SaaS adjusted EBITDA increased to $10.8 million, exceeding our guidance range and resulting in an adjusted EBITDA margin of 10%. This performance underscores the progress we are making in scaling our profitable and durable software business. As we noted last quarter, first quarter included a temporary headwind of approximately $2 million to $3 million tied to shared cost allocations. With fewer print publications scheduled in the beginning of the year, a greater portion of operating expenses were attributed to the SaaS segment under our current allocation methodology which follows revenue activity. This dynamic will begin to reverse in the second quarter as print revenue recognition ramps shifting these costs back to the Marketing Services segment. Importantly, this will also begin to smooth out for the remainder of the year and beyond as we extend the majority of our print publications onto a 24-month cycle. That change improves visibility and leads to a more consistent cost attribution across the business. We remain focused on driving profitable growth in SaaS, balancing top line expansion with disciplined cost management and we expect continued adjusted EBITDA margin improvements as we move through the year. We concluded the first quarter with 111,000 SaaS subscribers including 15,000 Keap subscribers. This reflects a substantial 59% increase in our subscriber base year-over-year. As Grant mentioned in his remarks, a key element of our go-forward strategy involves focused effort on our existing customer base to drive increased value and revenue. With a significant portion of our current subscribers utilizing only one paid product, we are strategically positioned to expand their engagement and adoption of our broader offerings. This initiative to drive greater spend within our existing customer base is not only a pathway to ARPU expansion throughout 2025, but also represents a more efficient and significant contributor to our bottom line profitability. In the first quarter, our overall SaaS ARPU reached $335. Thryv contributed an ARPU of $320, showcasing positive quarter-over-quarter growth. Keap-specific ARPU was a robust $428 similar to last quarter. Looking ahead, we have good line of sight for continued ARPU expansion throughout the year, driven by the inherent strength of our software platform with its multiple adoptable products as well as our recently updated compensation plan designed to incentivize and drive increased NRR. We reached our highest reported seasoned net revenue retention this quarter of 103%, emphasizing the differentiated value we create and the sustained return our clients experience. We've discussed previously that our long-term goal is to maintain retention near 100% which we expect to continue to achieve. Additionally, clients with two or more Thryv SaaS products grew to 16,000 at the end of the quarter compared to 12,000 in the prior year further highlighting the expansion we are seeing with existing clients. Thryv Centers per client also grew to 14% at the end of the quarter compared to 8% in the prior year further highlighting the traction we are seeing with existing clients. Moving over to Marketing Services. First quarter revenue was $70.2 million and above guidance. First quarter Marketing Services adjusted EBITDA was $10.1 million resulting in an adjusted EBITDA margin of 14% and just above guidance. As anticipated this quarterly performance is subject to the dynamics of the print schedule and we project a return to normalized levels starting in the second quarter. First quarter Marketing Services' billings were $81.4 million reflecting a 42% year-over-year decline. This trend more closely aligns with our strategic direction for Marketing Services as we continue to convert many of our legacy Marketing Services clients to our SaaS offerings. The pace of this transition impacts the rate of decline in marketing services billings. As previously disclosed, we are exiting the Marketing Services business by 2028 with cash flows from the business extending into 2030. This will provide the company with ample liquidity to meet its obligations during the transition to a fully SaaS-focused model. First quarter consolidated adjusted gross margin was 68%. First quarter consolidated adjusted EBITDA was $20.9 million, representing an adjusted EBITDA margin of 12%. Finally, our net debt position was $298 million at the end of the first quarter. Our leverage ratio was 2.2 times net debt to EBITDA, in line with our expectations. Net debt increased primarily due to planned upfront vendor payments, the timing of corporate bonus payouts, and the extension of our print directory assets to 24 months. This lengthening of the directory cycle is a component of our previously communicated strategic plan to exit the Marketing Services business by 2028. As we've previously discussed, the aforementioned factors are expected to result in peak leverage during the second quarter on a trailing 12-month basis, notwithstanding our anticipated strong EBITDA generation in that period. We expect a substantial deleveraging in the back half of the year as these impacts normalize. Turning to our outlook for 2025. For the second quarter, we expect SaaS revenue in the range of $113 million to $115 million. For the full year, we expect SaaS revenue to be in the range of $460.5 million to $471 million. The second quarter, we expect SaaS adjusted EBITDA in the range of $18.5 million to $19.5 million. For the full year, we expect SaaS adjusted EBITDA in the range of $67 million to $71 million, which implies SaaS adjusted EBITDA margin of 15%. The adjustment is related to projected traffic costs. For the full year, we are confirming our Marketing Services adjusted EBITDA guidance range to be $77.5 million to $78.5 million. Now, back to Joe.

Thank you, Paul. We got a good start to the year as you've heard strong core metrics, healthy customer spending. We're doing well. But we do read the same headlines that you do that awful times are ahead and it's going to be tough and so on and I want to just spend a minute speaking to that. Our customers do break fix stuff. They're the guys that show up when you have a broken window or your roofs leaking or your car, the check engine light comes on or you break a tooth and you got to go to the dentist. They solve all those non-discretionary problems and they are therefore very resilient. We don't have any luxury stuff. We don't have any discretionary stuff in our customer base. No little blue boxes, no fine dining. Our customers are very resilient. And so I've been working with small businesses for a long time. I would expect they will be very resilient going through a recession if one is in the offering for us. What I'm finding is that we're in kind of a Goldilocks moment, meaning sometimes when things are too good and expectations are too high, small businesses can be a little slow to invest in marketing tools and doing stuff. Right now they are concerned about making sure their order book is full making sure they know where the next jobs are coming from. And accordingly, they are buying Marketing Center and buying a lot of its growth package add-ons so much so that we're seeing additional traffic expense because of that. And so I consider that a really good thing. It does -- there's a little bit of additional cost to that, but it's a real good thing to see that small businesses want to meet with us, they want to buy Marketing Center, and they want to buy add-ons. So, I think that's a real positive. Just my final comment here on the guidance that we've taken for the year. We've taken a very conservative view in light of all the headlines and all the things that we're hearing and seeing out there. We want to make sure that we can continue to fully deliver on our promises. And we don't actually see any big problems at the moment, maybe it's out of an abundance of caution, but we feel very confident in the results that we've had to-date and very confident in the products that we have that they're appropriate for this time. So, with that operator, we can turn it for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Arjun Bhatia with William Blair. Please go ahead.

Perfect. Thank you, guys. Congrats on a nice strong start to the year here. Joe, one of the things that stuck out to me this quarter was the net retention rate that you called out at 103% and it sounds like that was a record high. It seems like the priority on cross-sell and expansion is working already. But can you maybe just elaborate a little bit on that? What are customers buying in addition to their core Thryv SaaS implementations? Which new products are you seeing traction for? And then for either you Grant, I'd be curious to hear just in terms of how sales force readiness is playing out to be able to kind of sell these newer products that you've launched relatively recently.

Thanks for the question, Arjun. We have been investing in the last couple of years not just in developing new Software centers to build out the platform, but also in our actual go-to-market motion. We've been doing a lot of work on go-to-market. And we're able to give the sales reps in their sales force automation tools and each morning, go call on this customer and have this conversation and here's why. And I think you're seeing a lot of that come through. And you might say, well, haven't you always had that? We haven't. We've worked really hard on that the last couple of years and we're seeing the fruits of that. In terms of what those plays are, we are running very specific plays against the base and with a good effect. So the simplest one is adding additional centers, so they'll have a Business Center will add Marketing Center or they'll have Marketing Center will add Business Center or Reporting Center and adding additional full-on centers. But even shy of that, we have been also developing some simple add-ons to help boost the amount of new businesses that they need basically boost their presence in the market and help drive additional leads and additional new customers. I mentioned on the call, that's been really strong lately. And I think -- and I know we're supposed to be crying in our mirror about the economy and it's supposed to be terrible, but our guys are chugging along doing just fine. We aren't really experiencing a whole bunch of macro issues. We're chugging along. And I can't really point to anything that's happening there. We're sort of I guess bracing for all that we're reading about, but we're just not seeing any. I mentioned on the prepared remarks, I mean our customers break everything that or fix everything that breaks in your life. When that stuff breaks you're still going to fix it even if the economy is a little softer. So they're definitely interested in trying to make sure their order books are full. So I hope that helps.

Yeah. very helpful. And then the second question you mentioned increased traffic expense from I think customers seeing -- or you guys seeing elevated demand for Marketing Center, is that largely just kind of your inbound marketing costs, your lead gen costs? What's exactly going into the incremental traffic expense you're seeing here?

One of the tools that is an add-on to Marketing Center so Marketing Center is a platform that instruments all your marketing allows you to make data-driven decisions you can manage your social in there, there's a whole bunch of good things you can do. We've added on top of it now some add-on tools where we'll help you optimize your position of your website to help you show up better and more organic results. And we've also added some things that have traffic in them. So we're actually driving some search into your business as well. And that product has continued to sell well. It's actually sort of in the mix of things outstripped actually what we thought it would do. So we had planned for a little bit of TAC in there and there's just a little bit more. So it's not a giant thing. I just want to bring it up as one of the moving parts. And it's sort of contra to at least what I read sometimes in the media that small businesses are going to just roll over and stop. We're finding that, they're marketing they're out there doing their thing looking ahead trying to make sure their order books are full.

Okay. Yeah. That's super helpful. Perfect. Thank you, guys.

Thanks, Arjun.

Your next question comes from the line of Scott Berg with Needham. Please go ahead.

Hi, everyone. Nice quarter, here everyone. Thanks for taking my questions. I guess a couple of questions Joe. Let's start with the Keep partner conference. It was your first one. My guess is that you've been to obviously with the acquisition just less than six months ago now, but -- or almost exactly six months ago now but what were your takeaways from that conference? What were you hearing from partners of that platform with regards to how they think this combination can work going forward?

Well, first of all, thank you for attending. Appreciate that. The partners have been thrilled with Keep's automations and the way they're flexible, the way they're able to put them in. And it's a key part of the service, they provide to various customers. And I'll just illustrate this. A lot of our partners are people that, will specialize maybe in a particular vertical. So maybe they help wellness people, or maybe they help dentists or maybe they help gyms stay packed stay full and they help them with all their marketing and so on. And what they do is they use the keep tools to build automation not for their marketing and in some cases not even for their marketing for other things like hiring automation or service fulfillment. But one of the things that Keep never did and doesn't do, is it doesn't help you build your list. If you have a list it nurtures the list and it helps you work your way through. So they're super excited about Thryv's ability to help them build that list meet new people add new people to the top of the funnel. So if you picture a marketing funnel where you meet people and they start the process Thryv is really good up at the top of the funnel and Keep is really good in the middle and bottom of the funnel the nurture and convert and then follow-up, follow-up, follow-up stuff. So for them, it's just the completion of that funnel. And they're super excited because they feel like for a very high percentage of their customers they're going to be able to add some of the Thryv offering. So they're very anxious to get the full Thryv catalog at their disposal. And like any acquisition we didn't instantly have all the back-office plumbing done so that they could do that. So they're sort of beat on going how quick can we have and we want to go right now. And happily, the teams have worked really hard and that's beginning to come together. So I think, they're going to be pretty happy about that. The other thing that they wanted is that towards the tail end of the prior administration in Keep, they were in kind of a little bit of a harvest mode. They weren't really growing. They weren't really investing a lot in nourishing their partner channel or even innovating their product as much as they had in previous years. And so a lot of the partners have got list of apps of things that they would like from Keep that they're waiting for. And immediately, when we got to key, we leaned into trying to speed some of that up. And we were able at the partner conference to unveil some things that are now done, and then to make some near-term promises for additional improvements API hooks other things that there -- some technical things they're looking for that will make their experience with Keep better. And so I think there's pretty high morale. I mentioned they traveled in from all over the world. So we needed to give them something or they would have flown back to Italy or wherever they came from pretty disappointed. So, we needed to give them something or they would have flown back to Italy or wherever they came from pretty disappointed. So, we feel like it was a real success. And the sense of community that they have built, a lot of these people have been coming -- working with Keep and coming to these conferences for more than a decade. So there's a real -- there a lot of people that are personal friends the a lot of -- and the other thing we did that they did, it was really cool was a networking session where they had people sit at a big table and kind of move every three minutes and just meet all these different people that they hadn't known before as you kind of scoot it along almost like speed dating. And I think they really appreciate the power networking that happened there as well. So anyway, the conference was a big success and we're planning a customer event in the fall that will be many, many times what Partnerkon was which was just for partners.

Understood. Helpful. Thank you for that. Joe, I guess last question for me is your -- your SaaS customer additions were down 3,000 in the quarter. It looks like it's kind of related to the core Thryv customer base there. Is -- I guess maybe, can you add a little color in terms of why that's down quarter-over-quarter? I know you're focusing a little bit more on expansion activities and top of the funnel and bringing customers in, but I would have thought maybe even with that focus we'd see something that was closer to flat quarter-over-quarter.

Yes. Good question. Look the holiday season is always soft for us. In Q4, we're usually doing fine in the beginning of Q4. But as we get to that Thanksgiving to New Year's even a little past New Year's run here in the US, it's harder to get small businesses to sit down and have a conversation with us. They're doing their own lives. They're doing -- they're taking vacations, they're doing their own things trying to finish up, home services jobs for customers under a lot of stress that's ready for the holidays. And then our own employees a lot of times have personal plans to take extended trips because it is a soft period. So it seems to feed on itself. That's here. When you get over to Australia and New

Understood. Thanks for taking my question.

Your next question comes from the line of Jason Kreyer with Craig-Hallum. Please go ahead.

Great. Thank you guys. Maybe I'll start with Grant. You had highlighted some changes in the sales motion. Just curious, if we go into a more challenging macro environment, is there a different product suite that you think resonates better with your customers that you would try to lean into?

Well, it's funny. There have been times in recent memory when the economy was so hot that our guys were booked solid. So when you would go to them and talk to them about putting in additional marketing instrumentation or better ways to run their social media or just different things that would be marketing oriented and help them grow, they weren't necessarily at the very top of their list. And if there's a threat that things are going to slow down or let's say, things even do slow down a little bit, they're much more anxious to prioritize meeting with you about that stuff and focusing on that stuff so that they can get work. So I mentioned, I almost feel like the current environment is sort of Goldilocks because it's not bad at all. It's more that it's supposed to get bad in the future. And I think it's that supposed to get bad in the future thing that's causing them to really pay attention. So yes, I guess the answer to your question is to answer it directly is all of the grow your business type stuff that we offer is particularly in demand if things slow down. And then when things are hot as a fire cracker we maybe are leaning a little bit more into the run your business stuff getting into the – I sometimes use the expression the broccoli stuff you should be doing CRM type stuff, working on your scheduler your estimates invoices, billing, working on your ratings and reviews all that stuff. And at the moment the marketing and sales kind of stuff is really in both.

Appreciate that. Just wanted to see if you can unpack – you gave a lot of good commentary on what you're seeing right now. You haven't seen incremental pressure things like that. But can you maybe pair that with how you're thinking about the guide, your decision to maybe pull back on expectations for SaaS revenue this year? Is it just cautionary for what may come? Or just any more thoughts there?

Yes. You just answered your own question. That's exactly what it is. We just – we feel like a more cautious stance is appropriate, given the really just the tremendous uncertainty that's in the market. Our – I mentioned before our guys fix the broken things in the world but they have to get subzero refrigerators from somewhere. They have to get fancy window packages. They have to get stuff that potentially gets affected by tariffs. So there's lots of concerns about that. And then there's just overall economic noise and sort of scary media headlines. So I think it was just prudent in all honesty. It's not linked to anything specific that we're seeing. We delivered I think nicely on our first quarter and we have great line of sight into the next quarter. But the whole rest of the year is a long time. And with all the prognostications look you've read some of them about recessions and other things, it just seemed prudent to back off a smidge. We didn't move it very much in all honesty but we just thought it seemed to make sense to take a little bit more of a cautious stance.

That makes sense to me. Thank you. Appreciate it.

Thank you.

Your next question comes from the line of

Thanks. Good morning. And appreciate you taking the questions. Joe I wanted to ask about just retention of many of these Marketing Services customers that are moving over to the SaaS customer base. I mean can you talk about – I know you had a huge influx of those customers coming over in 2024. So can you just talk about the initial conversations and kind of the success you have of maintaining those customers for kind of a year plus after bringing them over last year?

Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Hi. This is Will [ph] on for Dan. I think you said that your long-term net revenue retention goal is staying at 100%. As you shift your sales focus to recurring revenue, increasing average spend per account would you evaluate raising that goal?

That's a really good question. I think there's going to be ebbs and flows to where our focus is. We had a massive add last year of new subs as we selected marketing services people to come over to have these upgraded experiences I spoke about at length earlier. And the job now is to bed them down, go see them talk to them about how to use it, what they can do and all that's going on. We invest a lot in taking care of these customers and making sure they have a great experience after they've migrated over. And that's just a real point of focus. But there could come a fiscal period in the future where the focus is more on bringing new people on or whatever. That's just the focus during 2025. So I think what -- in our Investor Day guidance and in our investor materials, we've talked about -- think of us as around 100% net revenue retention business, because we wanted to underscore that we're selling to DSPs. These aren't enterprises. Some of them do actually go out of business. Some of them do actually fail. And there's some uncontrollable loss that's always going to be in our numbers. That's offset by the fact that there's such a gigantic supply of them. Our TAM in the markets that we're trying to serve like eight million businesses. So we've got we can very easily on fairly short sales cycles replace one that leaves. And the DSP segment is just now migrating to the cloud. It's still pretty new for them. So I think it's a wonderful market. I think in a lot of ways a better market than enterprise. And I know you're probably putting your eyebrows up on that, but it's just so big and it's just so early. There's just so much growth there. It's so exciting. But it comes with a little bit higher churn and a little lower net revenue retention. So it's not a crazy question at all. And we probably will have some pretty high step in on net revenue retention over the next couple of fiscal periods just because we're putting such focus in the base. But that focus could also swing much more to expansion in the future at some point. So I think I'll stick with the guide that we're going to be there or thereabouts around 100. And if we keep blowing it away every period you can ask that question again in a couple of quarters and we'll have the champagne conversation about. Yes maybe we should raise it. But right now I think I'll hold where we are just out of conservatism.

Thanks for that. And then just one more. Now that you've accelerated the migration to a fully SaaS-based business what is your target leverage range over the next two to three years?

Paul, why don't you take that one?

Yes. Right now with the leverage our -- we plan to continue to pay down debt. So I think you would expect leverage to improve consistently as we go out in time. That's our plan at the moment.

Thank you.

And your last question comes from the line of Matt Swanson with RBC. Please go ahead.

Yes. Great. Thanks for taking my question and congrats on the strong start to the year. Joe as you're see more success cross-selling, can you just talk a little bit about how you're working to kind of ensure that continued success post implementation and make sure customers are seeing kind of the compounding value of the combined platform?

Yes. Thanks for the question. That's a good question. We -- that's probably our one of our number one areas of investment because if you look at the profile of our base, you'll see that it's been getting bigger and there's a lot to take care of. So we really prioritize their experience. And we go at it with a CX customer experience team that uses a variety of tactics. I mean they literally are calling them. They're on

That's really helpful color. And then we've mentioned a couple of times on the call, the Goldilocks moment for the customers. But I guess just maybe acknowledging like how your customers see the same news articles we do, like does this change your go-to-motion -- go-to-market motion at all, maybe like emphasizing the ROI of the platform more? Or is there any way you can kind of incorporate that into actually like a positive or a tailwind for the company?

Yes. It's a wonderful question because there's different flavors for different days. And I sometimes liken the growth aspects of our software to piping hot French Fries and the kind of run your business aspects of our software to steamed broccoli. We all know that steamed broccoli is really good for you, and you should eat it and you'll be healthier and better and so on. But it's sometimes not as fun and exciting. There have been periods where we were out there swinging the broccoli are really doing a lot of work on how your scheduler runs in your operating your business in CRM in the back. At the moment, the flavor that is really hunting is talking to people about growth, and we're seeing a lot of uptake growth. And that's where the Goldilocks comment came from. I remember, in the period when the government kind of took a helicopter and threw money at people right after COVID. Every one of our guys that build decks was booked out for a year for decks. And if they built swing pools, they were booked out swing pools for a whole year and so on and so forth. Everything was just -- they were so full. It was hard to talk to them about anything marketing. And so the thing that you did is you talk to them about operating stuff. But right now, there's more trepidation about that order book into the future. And so they're really anxious to take a meeting, keep the meeting and really focus on you on how can I make sure I've got the work going forward. And so that's my comment around Goldilocks. They're not broke where they can't write a check and buy it. They're still doing all right, but they read these headlines and it causes them to be more focused on their marketing. Does that resonate with you?