THRY - NASDAQ

Ladies and gentlemen, thank you for joining us, welcome to the Thryv Holdings, Inc. Fourth Quarter 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Cameron Lessard, Senior Vice President, Corporate Development and Investor Relations. Cameron, please go ahead.

Good morning. Thank you for joining us for Thryv Holdings, Inc. fourth quarter 2025 earnings conference call. With me today are Joe Walsh, Chairman and Chief Executive Officer, Sean Wechter, Chief Technology Officer, 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. Reconciliation of these measures can be found in our earnings release. With that, I'll turn the call over to Joe Walsh, Chairman and CEO. Joe?

Thank you, Cameron. Good morning, everyone. 2025 was a solid year. Our team accomplished a lot. SaaS revenues grew 34% year-over-year. SaaS adjusted EBITDA margin was strong at 16.8%. We are accelerating on the AI front. It is advancing our product roadmap. We are well-positioned as a leading SaaS platform for small businesses. I want to spend my time today clearly framing the future of Thryv Holdings, Inc. I want to be direct about what we are building, because the results you see for the quarter and our guidance for the year only make sense when viewed through that strategic lens. Over the past several years, we have communicated our transition from legacy print and marketing services into a leading SaaS company. This has been a successful transition that is well underway. What we have not shared yet is our next phase, not just evolving into a leading SaaS company, but becoming the platform of choice for small businesses who need to market, get found and chosen, who need to sell with automated follow-ups and capture every lead, and who need to grow by reaching more customers than ever before. Let me explain why this is important and what we have been building toward. Our Marketing Center is our fastest-growing product, a differentiated and valuable offering in the market that is growing north of 50% year over year. In fact, in 2025, it more than doubled in revenue. If you look at our old paradigm of centers, it would be our largest center. We recognized a gap. We were very good at helping businesses get found online and attract customers, but we needed to be equally strong at helping them convert those leads into sales, turn those customers into repeat buyers, and scale the entire cycle. Small businesses simply do not need more leads. They need to drive more revenue. That requires mastering the full journey, get found, land the sale, deliver great service, earn repeat business, and do it again and again. A network effect with increasing efficiency. That is precisely why the Keap acquisition was so strategic for us. We acquired years of development time and product sophistication that would have been nearly impossible for us to replicate internally. The value is not in Keap's revenue today, it is in the platform capabilities and the engineering talent integrated into our new platform that has let us accelerate our entire roadmap by multiple years. That is exactly what we have been engineering, combining Marketing Centers' proven ability to grow your business and get found online, with Keap's powerful capability to move leads through the sales funnel and turn them into customers, all in one unified platform. No more separate products, no more fragmented experiences. Going forward, our entire strategy centers on one powerful offering. The Thryv Platform, powered by AI, will be launching later in 2026. The Thryv Platform represents a fundamental paradigm shift from selling individual products and centers to delivering a unified growth platform for small businesses. This is an architectural go-to-market and operating model transformation designed to help businesses market, sell, and grow within one integrated system. Historically, our software portfolio evolved as a collection of distinct solutions. That structure worked in a sales-led world. Small businesses do not think in terms of products. They think in terms of outcomes. How do I attract customers? How do I convert demand? How do I manage relationships? How do I grow revenue with limited time and expertise? The Thryv Platform is built to deliver those outcomes through a single experience, with 3 tiers aligned to where a business is in its life cycle, from a very small business just getting started, to growing small businesses, and then eventually to established businesses that want one platform to run their growth. A critical foundation of this platform is our CRM and automation layer. We invested here because the system of record is essential to building modern, product-led experiences. CRM is no longer a standalone tool. It is the backbone, really, that facilitates onboarding, automation, AI-driven insights, and expansion across the customer life cycle. At the same time, we are modernizing the platform around AI to reduce the effort required for customers to see value. AI is embedded directly into the customer journey to accelerate time to value, guide next best actions, and help small businesses grow without needing specialized marketing or technical expertise. This platform strategy also underpins a major evolution in how we go to market. We are moving deliberately toward product-led growth and a product-led sales hybrid model. Entry-level customers increasingly come in through self-service, product-led motions, while our sales organization focuses on higher value tiers, more complex needs, and expansion over time. There is one additional point I want to address directly as you think about our outlook. Over the past several years, our SaaS growth benefited materially from these initiated upgrades, where we took marketing services clients and moved them from legacy platforms onto our modern SaaS platform. That motion was effective and helped us scale quickly, but it was always going to reach a conclusion. As we exited 2025, that upgrade pool is largely behind us. We have some remaining on our roadmap for the next few years, but they are smaller as a proportion of our overall revenue growth. Going forward, our growth will be fueled by 3 primary drivers: organic customer acquisition, expansion, and retention. The Thryv Platform is explicitly designed for this next phase. As a result, near-term growth rates will moderate, but the underlying quality of that growth improves meaningfully as we move out. How to think about us going forward? Let me discuss how you should evaluate Thryv Holdings, Inc.'s performance, because I think there is an important distinction between signal and noise in our metrics. I want to make sure you are focused on what exactly matters on our long-term business value. Our business quality is fundamentally defined by customers spending $400 a month or more. We call these quality customers. This is not an arbitrary threshold we picked for convenience. This is where our unit economics work and where retention is materially stronger, where stronger expansion is attainable, and where we are building a compounding business model. Who are these customers? These are established small businesses, typically doing close to $1 million or more in annual revenue, and they have 4, 5, 6, even more employees. These are not solopreneurs agonizing over a $50 expense. These are real businesses with real operational complexity. We are spending $400, $500, $600, $700 a month on a platform that drives customer acquisition, manages their sales pipeline, and helps run their operations, is, frankly, a straightforward return on investment decision. The data on this segment tells a really clear story. Retention rates are significantly higher than our blended average, and they are improving. They tend to expand over time, adding capabilities, increasing their monthly spend, and deepening their investment in the platform. This segment is growing both in absolute customer numbers and as a percentage of our total base. These are businesses that integrate Thryv Holdings, Inc. into their core operations, and they see measurable returns. Together, we become true partners in their growth. This is where we win, and this is where we are deliberately concentrating our product development, sales resources, and our customer success efforts. Now, let me address what has created noise in the overall numbers. We carry a legacy tail of smaller customers, many spending well under $200 a month, that came into our base through acquisitions, upgrades initiated by us, or promotional offers that made sense at different points in our history, but do not align with our current platform value proposition or our current pricing structure. These are fundamentally different businesses. These are micro-businesses, solopreneurs, side hustles, operations where $100 or $150 a month is a meaningful recurring expense that they are constantly evaluating. We manage this segment in two ways. First, we actively upgrade these customers into higher value packages. We run targeted outreach, demonstrate additional capabilities. We show them the ROI of expanding their use of the platform, and it works. Many do upgrade. They see value, scale their usage, and transition into that $400+ segment, where the retention and expansion economics really kick in. You can see evidence of this working in our ARPU trends. The second way we manage them is we accept the fact that these smaller customers do sometimes churn, and we are okay with that outcome. While it creates some pressure on our aggregate retention metrics, it does have minimal impact on our overall revenue.

If you evaluate us purely on total customer count or on blended retention metrics that treat all customers equally, you are essentially measuring the wrong thing. You are giving equal analytical weight to a $75 a month customer, a solopreneur who is extremely price sensitive, and likely to churn software vendors regularly, and a $600 a month established business with $1 million in revenue that views Thryv Holdings, Inc. as mission-critical infrastructure for their operation. Those are not the same business relationships. They do not have the same economics, and they should not carry the same weight in how you think about our business trajectory. What should you be measuring? Growth in quality customers spending $400 a month or more is 18+% in the fourth quarter of last year. We have had steady growth in that segment. Quality customers now account for 69% of our revenue in Q4, compared to 60% the prior year. Marketing Center is our largest and fastest-growing center within our market sell growth strategy. At two-thirds of our SaaS revenue, growing 34% in Q4, it is one of the clearest signals of where this business is headed. You know, Marketing Center as a center is actually growing faster than the 34%. The 34% refers to the whole kind of platform of market sell growth. This matters enormously because Marketing Center represents an AI-enabled platform. These are customers saying, "I want technology that helps me acquire customers, manage my pipeline, and grow my business, and I am willing to pay for it."

customers genuinely love software when it delivers results. Marketing Center customers fit our ideal profile almost perfectly. They are spending meaningful amounts. They are seeing return on investment they can measure. They are expanding into additional capabilities as they see value. They are sticking with us because the platform becomes increasingly embedded in how they run their business. This is our business model. This is what Thryv Holdings, Inc. looks like at scale. It is the right product for the right customer profile. The performance validates everything we have been building toward. When you are thinking about how to evaluate our performance and trajectory, do not just look at the blended customer counts or aggregate metrics. Look at the growth that we are seeing in our market sell growth strategy. Look at the $400 a month cohort expansion. Those are your forward-looking indicators. That is where you can see proof that when we execute our strategy with our target customer base, we can drive strong, sustainable SaaS growth. Let me bring this together. Performance of MSG proves the model works. We are taking those learnings, combining them with Keap's customer conversion and lifecycle capabilities, and scaling that proven success across the unified Thryv Platform. Judge us on the quality and trajectory of our customer base, not just the quantity. That is where the real value creation story is unfolding. With that context, let me introduce our Chief Technology Officer, Sean Wechter, who will talk about the progress we are making on the AI front. Sean has multiple tours of duty at market-leading public and private technology companies and joined our company about half a year ago. I will hand it over to Sean now to share a bit about what his team has been focused on. Sean?

Thank you, Joe. Good morning. My name is Sean Wechter, I am the CTO of Thryv Holdings, Inc. I joined Thryv Holdings, Inc. in October and have been super impressed with the foundation that we have built and the large customer base we have to build on. The first two levers I pulled when I arrived were to amp up our AI efforts and our data assets, get them cleaned up. I was fortunate to be starting on third base because the products and ecosystem at Thryv Holdings, Inc. are already API rich. Since we are going to be talking about artificial intelligence, I just wanted to go over a few caveats. Things in the AI world are rapidly evolving, our strategy is to adopt the latest and greatest AI tools and partners, and this may change as new leaders emerge. Our strategy is also to conduct a portfolio of experiments and double down on the winners. What we are going to cover today, we are going to go over a summary of our AI strategy and my favorite AI programs. A summary of our AI strategy at a macro level is that we want to partner with the latest and greatest AI solutions on the market. When we think about our strategy, we break it into a few buckets. We have the enterprise, we have our engineering team, and we have our product. On the enterprise, my favorite author is Jim Collins. He wrote the book Great by Choice and Good to Great, and he has this concept of bullets versus cannonballs, which means, you know, you try lots of things, and then you double down on the winners. We are going to do that, exactly that in the sales, customer success, and engineering domains. The reason for that is there are lots of new AI solutions hitting the market every day, and some of them are great, and some of them are not so great, and you have got to sift through them all, and thus, bullets versus cannonballs. On the engineering front, developer productivity is the name of the game. We want to make sure our engineers have the latest and greatest tools in their hands, and we also want to be great at rapidly integrating and interoperating within our customer's ecosystem and our ecosystem. On the product front, we want to bring AI down market to small businesses in an ambient way. Meaning, ideally, AI does the intended task for you, hopefully proactively. For example, if you want to reschedule your next appointment or move a lead from one system of record to another, simply do it by voicing your request, and it is done. We want to be strongly embedded in the top AI models. We believe that that is going to make our products more sticky, and we want to partner like crazy with the winners and rapidly evolve and iterate as those winners rotate every 6–12 months. My favorite uses of AI so far at Thryv Holdings, Inc. is one, our Budget Optimizer, which is a super cool program that used AI to transcribe calls, then used AI to score those transcripts. Then we used machine learning to optimize that data for the best lead sources and the best use of the customer's budget. When we think about our data and our scale, we have LLM data like everybody else, but we have industry data and customer-specific data that helps us on our AI journey. Another cool program we have is the New

Thanks, Sean. Let us dive into the quarter. SaaS revenue increased 14.1% to $119 million in the fourth quarter and was within guidance. Keap contributed $16.2 million in the fourth quarter. SaaS revenue increased 34.2% year-over-year to $461 million for the full year. SaaS adjusted gross margin was 70.4% in the fourth quarter. SaaS adjusted gross margin increased 70 basis points year-over-year to 72.7% for the full year. SaaS adjusted EBITDA increased to $20 million in the fourth quarter, within guidance and resulting in an adjusted EBITDA margin of 16.8%. SaaS adjusted EBITDA increased to $73.8 million for the full year, resulting in an adjusted EBITDA margin of 16%. We ended the fourth quarter with 100,000 SaaS subscribers. SaaS ARPU reached $373, representing a 15% increase year-over-year. Seasoned NRR stayed flat at 94% for the quarter. Growth in quality customers spending $400 a month or more grew by 3,000 or 18% year-over-year, and now represents more than 20% of our client base. Multi-product adoption continued to accelerate in the fourth quarter. Clients with two or more SaaS products grew to 19,000, or 23% of our base, compared to 15,000 or 16% of our base one year ago. Thryv Holdings, Inc. clients with two or more centers was 15% at the end of the fourth quarter, compared to 12% in the prior year. Marketing services revenue was $72.6 million for the fourth quarter, in line with our guidance. Marketing services revenue was $324 million for the full year. Marketing services adjusted EBITDA was $18.8 million in the fourth quarter, within guidance and resulting in an adjusted EBITDA margin of 25.9%. Marketing services adjusted EBITDA was $78 million for the full year, resulting in an adjusted EBITDA margin of 24.1%. Fourth quarter marketing services billings totaled $60.9 million, down 34% year-over-year, reflecting our intentional shift in our strategy as we continue to initiate upgrades of legacy digital marketing services products for clients to our SaaS platform. The decline will persist, but at a managed pace. We remain on track to exit marketing services by 2028, with cash flows lasting through 2030, providing liquidity as we fully transform to a pure play software business. Free cash flow was $31.1 million in 2025, for the first time, we expect the number to grow meaningfully to $40 million–$50 million in 2026, a direct reflection of our software business having reached size and scale that is now driving the majority of our profitability. We ended the fourth quarter with net debt reduced by $15 million to $251 million, bringing our leverage ratio to 1.7 times. Turning to our outlook for 2026. For the first quarter, we expect SaaS revenue in the range of $114 million–$115 million. For the full year, we expect SaaS revenue in the range of $461 million–$471 million. For the first quarter, we expect SaaS adjusted EBITDA in the range of $12 million–$13 million. For the full year, we expect SaaS adjusted EBITDA in the range of $70 million–$75 million. For the full year, we expect our marketing services revenue to be in a range of $150 million–$160 million. For the full year, we expect marketing services adjusted EBITDA in the range of $30 million–$35 million. I will turn the call back over to Joe.

Thank you, Paul. You will have noticed in Paul's guidance that is a little bit conservative on the quarterly guide and the guide for the year for SaaS. We have a tremendous amount of faith in our market sell grow platform, this initiative I talked about in the opening. We basically have struck oil. This is really selling very quickly and working well. As we are setting up this transition, we expect slower growth for a few quarters, re-accelerating later in the year and going strong into next year. We are taking a conservative guide as we work our way through that transition. I will turn it over now to the operator for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Arjun Bhatia with William Blair. Your line is open. Please go ahead.

Perfect. Thank you guys so much. Some interesting announcements there. Joe, with the new platform, maybe we can touch on that first. I am just curious how you kind of envision the adoption kind of curve of the new platform. Like, is there going to be a migration of existing customers? You know, like what are the kind of, you know... Is that disruptive for customers? How do you plan to do that? Then just how long might it take before the new platform is sort of fully ramped up for your entire customer base, and you are selling it to new customers as well?

That is a great question. Thanks, Arjun. It is interesting, you know, Marketing Center has been around, and it has been steadily building, and we have been sort of dialing it in, and it is fitting in beautifully in a market where, you know, there are a lot of people with vertical CRMs and, you know, other kinds of offerings. You know, we are uniquely placed in this ability to find customers. You know, we still own and control, you know, lots of big directories like YP and Superpages, and we have got a big network of partners like Yelp and Nextdoor and many, many others, both here in the U.S. and over in Australia and New

Yep. Yeah. Perfect. Very helpful. Appreciate that color. Then, going back to just how you think about your customer base and the new sort of segmentation around quality customers, how should we just view the retention metrics and LTV dynamics of this quality customer cohort? How does it differ, or maybe the better way to phrase it is, what is the overlap with the seasoned customer metric? You know, are these all tenured customers, or are there new customers that are also spending over this $400 mark per month?

There are definitely some new customers that are coming in right away. I mean, if you look at what our field sales force is selling right now, on average, they are selling customers that are over $400 a month. I mean, they, you know, they are out there selling big, and they are having a lot of success, you know, selling this kind of fully hatched program. We tried to talk about it a little bit in the press release, prepared remarks. You know, we have been transforming the directory business of the past into this SaaS business, and in so doing, we... Some of the legacy platforms that date back to some of the old Regional Bell Operating Companies that were bought and rolled up and were a part of this, some of these platforms were, you know, 20 years old and older, that clients were running on, and we literally needed to shut those down and get them off. We landed them on our modern SaaS platform, and we gave them a lot more value, gave a lot more functionality, a lot more tools, and we moved them over, you know, without disrupting them with a big price increase. A lot of these people came over, and they were, you know, below our rate card and not necessarily natural, you know, SaaS customers or natural customers that really were wanting to invest and build and grow their business. We have been working with them, trying to get them engaged with their tools, and in many cases they are getting engaged, and they are buying more, and they are becoming quality customers. In some cases they are saying: "Look, you know, I do not really care about this. It is not really what I want," and they are churning away. That is part of why you are seeing noise in the gross customer number and why we have kind of pointed you to what is going on under the hood. You have got this $300 million plus dollar business that is growing fast, that is really strong, and you have got this big client base. About, you know, 69% of our clients are this quality metric where, you know, we make good margins. These are a little bit larger businesses. These are businesses that have the ability to buy more from us. I get it. There is so much noise in our numbers, it is hard to kind of see it all. That is kind of been our approach.

All right. Perfect. Thank you.

Your next question comes from the line of

Hi, good morning. Thanks for taking my questions. Joe, I wanted to ask you how your go-to-market approach is going to evolve now with this greater focus on quality customers. Can you just dive a little bit deeper in terms of how you are thinking of serving the lower end versus your direct sales approach and maybe even working with some larger partners over time?

Yeah, thank you. We made, you know, sort of a natural mistake, if you will, in the early going. You know, we were, you know, anxious to build a software company. We were anxious to talk to anybody that would talk to us to sell it. We sold anybody that would talk to us. In the process, we did a massive experiment to figure out who our ideal client profile is. We sold a lot of solopreneurs, very small businesses, where, you know, they may have come in for an initial kind of $300 a month-ish kind of deal, and that was a big bill for them, and they, you know, worried every month about it. You know, they were not necessarily able to fully utilize all the functionality in the software. At the same time, we went out and we sold some bigger businesses, and we saw them really engage with the product, really begin to use it. We saw them buy more, and so on. What we pretty much have decided is that our phenomenal, you know, in-person sales organization should really spend its time with the larger businesses. We should develop more of untouched by human hands motion for the smaller. We are, you know, we have been building this sort of product-led growth approach, where, you know, for a smaller business that wants to come in, you know, we are going to have products that they can buy, and, and they will be able to do that. There will be, you know, all kinds of, you know, communities and, frequently asked questions and videos they can watch, and so on. We are not necessarily going to, you know, deploy somebody who makes six figures out there calling on them to help them with that. The economics of that just are tough to support. We really have put, you know, most of our emphasis and most of our focus on marketing to and prospecting for larger businesses, more businesses with more like, you know, $1 million in revenue or close to it, and less of the kind of very, very small person that works alone or maybe a two-employee business. Those we hope will still come in and, you know, come in through our product-led growth motion that we are developing. You know, we think the majority of where we will spend our time is with these bigger businesses.

Understood. Just one follow-up question around the launch of the new platform. Can you clarify how much more development work needs to be done, and when you are planning to really kind of broadly roll out this new MSG platform as you referred to it?

Yeah. We are selling it right now, and it is going really, really, really well. What is happening though is we are doing more work to put more functionality, and I do not know if any product is ever really done. Bringing it, you know, further along, there are some really bold AI initiatives where we use the MCP layer, and we are making it do all kinds of interesting things that are sort of happening in the lab that will be, you know, coming into the product fairly soon. It is progressing nicely. We, you know, we have a, you know, a trial version out and a small beta that will be expanding more broadly fairly soon. It is all coming together now. It is not like a flash cut where we are not doing it, and then we are going to do it. We are selling it right now. There are dramatically improved versions of it that we plan over the course of the year.

Your next question comes from the line of Matthew Swanson with RBC. Your line is open. Please go ahead.

Yeah, great. Thank you guys so much for taking my question. I was curious on the tiers of kind of how you are pricing the new platform. I think it makes a lot of sense from kind of a streamlined standpoint. What are you seeing or kind of what are your expectations in terms of how your quality SaaS customers are going to transition over, at what tier, and does that have any kind of distinct differences from a pricing standpoint compared to the existing products they are on?

I think it is more. It is a great question because, you know, you have got different kinds of businesses. You have got the very small kind of dreamer, just getting started business, and we are going to have a product for them. As I mentioned, that we are not really going to talk to them about it, per se. We are going to, you know, let them come to our website and sort of do it on their own. We are going to have kind of a mid-price thing that is a nice step up for those people who start on that trialer tier, and that second tier might also be an area that an in-person salesperson might be able to land somebody on, and then there will be a higher tier. You know, my experience is to scale anything. You need to keep it relatively simple. It cannot really be, you know, a blizzard of different choices, and all that just becomes too confusing. You know, that is why we are coming up with this more streamlined, simple approach. There will be add-ons and things that you can buy over and above that initial triplicate of choice so that we can continue to grow the customer. You know, we will have an offering, you know, at the low end for a smaller business so that they can come and they can buy, but we are not going to deploy a whole bunch of sales or services costs against that.

Yeah, that is helpful. Maybe following up right where you left off there and just kind of thinking about some of the efficiency gains that you could have by having such a, you know, simplified or centric go-to-market approach, would the plan be to end of life the other centers or other products over time, or is it just too early to think about that?

I think it is too early to think about that. I mean, the market sell growth platform is pulling across our product range, all the things that we think support that. What was it, at one time, Thryv Reporting Center is powerfully in the middle of that now. You know, Thryv Business Center is a separate thing, and I mentioned quite honestly, there are, you know, some numbers of customers that have opted more toward the market sell grow piece because that is really what they want. They really want the phone to ring. They really want a bunch of business coming in. You know, they were not prepared to really fully use all the functionality of an operating system in their business. That is kind of right. That is the way it is working out. That is part of the reason that you are seeing a little flatness in our top-line revenue growth and our guidance, is we are trying to give a little room because we are seeing some of that cannibalization. In terms of the longer term, you know, we have got a very large base of Business Center customers engaged and using it and happy. You know, we do not intend to kick them off. We want to continue to serve them, and we are really happy with them. In some cases, they have got Business Center, and they also are buying all the marketing tools and doing that as well. We have more cleaned up and segregated that. We feel like we can scale bigger, better, faster, and run a more efficient business with a more streamlined set of product offerings.

Thank you. Your final question comes from the line of Jason Kreyer with Craig-Hallum Capital Group. Your line is open. Please go ahead.

Thank you, guys. Joe, I was wondering if you could talk more about the AI functionality that you are embedding in the platform, and how that creates more value or more efficiency for your customers.

I would love to. I am going to share my answer with Sean. I am going to give him a look at it because Sean is, I think his middle name might be AI. He is Mr. AI. I will start a little bit, and then I will give it to Sean. You know, there is just a long list of different things that AI can do, and I know there is a lot of debate out there about, you know, will AI, you know, replace software, or will it augment it, or whatever? You know, look, the price point that we are offering here, it is not worth your time to sit down and try to figure out how to hack together your own stuff. I mean, we are organizing and pulling it all together and making everything in a complete package to help you accomplish growing your business. Most of the people that we work with do not have a lot of expertise in marketing. They do not have a lot of expertise in AI. They are good plumbers or carpenters or, you know, whatever they do, and they really need us. It is sort of AI with human in the loop, but the whole idea is this platform becomes easier and easier to use. If I am really honest with you, our biggest problem over the last, you know, decade has been getting the small business to really engage and do even small things that they need to do to make the whole wheel work, and the AI can come in now, and it can do those things to kick it over and create, you know, a cycle that works. The automations that we got in Keap do that same thing. There is a lot of really cool stuff like, you know, your customer calls you, and this thing can, you know, capture the transcript of the call. It can rate, grade, you know, was it a one through five lead? Where should it go in your lead funnel? It can follow up on that thing for you. It is really incredible, the stuff that it is doing. Sean, I know you have got some observations the way you think about it. I cannot seem to shut you up about it when we talk about it.

Yeah, I am equally excited about it as well, Joe. Jason, you know, we sit in the value chain between buyers and sellers and have for a long time. That means we have got a lot of really rich data around that, from call transcripts to leads to form fills. We are just trying to get creative on how to use that to benefit the actual small builder and small business. You know, there are just things that our small business needs to evolve into, like, you know, we call it AEO, answer engine optimization. You know, you had SEO, well, now you have to show up in all the frontier models and helping them do that. We have website generation, we have social posting, call analysis, AI Receptionist, you know, they are missing calls. They can now have an AI help them take that call, transcribe it, moving data around from a mix of ecosystem, you know, solutions in their ecosystem, you know, systems of record for finance and other CRMs and so forth. Eliminating that complexity is pretty exciting. When I talked about our strategy, there are new awesome tools that are popping up left and right, and we are committed to taking the best of them, simplifying them, and bringing them down market to our customers. That is really just a race without an end. Did that answer your question?

Oh, that was great. Thank you. I appreciate that. Maybe just one follow-up for me. Curious if you have any expectations for churn as you migrate customers kind of from where they are into these higher value packages? Thanks.

Yeah. We are seeing churn overall gently trend down. Now, we definitely had a little bit of a hump of churn following the massive migration. I mean, you will remember if you have been tracking our numbers closely, we went from around 50,000 customers to 100,000 really fast, and that was, you know, just a whole bunch of systems that we were sunsetting in the old, you know, phone company, you know, marketing services and Yellow Pages environment that we wanted to move over. We have had a chance now to, you know, really work with those customers and some of them, we worked with them out, and some we worked with them up. There is a little bit more of that to go, but the way I would say, Jason, is I think that when you look at our business over the next, say, you know, three years, kind of the arc of where we are going, we are subtly moving up market. As we move up market, I think we will get lower churn. Just when I study the base that we have now, you know, those customers that are, you know, down in that lower spend tier or the smaller businesses, have churn profiles that are higher than the bigger businesses that we are selling. When we sell a business that has, you know, eight or 10 employees and, you know, maybe $1.5 million of revenue or something like that, they tend to be very stable and behave really well. They have a persistent need for leads. They have an employee staff that is counting on, you know, the business ticking over and doing that next thing. When we sell a solopreneur or a two-employee business, they sometimes hit a rough patch and just decide to go get jobs and stop doing the business anymore, and it becomes a churn, and it has nothing to do with our software. I think my expectation is where we are trying to run the business is for lower churn over time. I am not saying we are going to go to enterprise-level churn, because we still are dealing with small businesses, but I think you will see it trend down over time.