Hello and welcome to Thryv's Third Quarter 2019 Conference Call. With me today are Joe Walsh, Chief Executive Officer and President; and Paul Rouse, Chief Financial Officer and Treasurer..

Some statements made by the company today during this call are forward-looking statements. These statements provide the company's current beliefs and expectations with respect to our financial performance and future events and trends affecting the company's business and industry in general and are subject to risks and uncertainties.

The company advises you not to place undue reliance on these forward-looking statements, as they are not guarantees of future performance..

Accordingly, they are or will be important factors that could cause our actual results to differ materially from these forward-looking statements. These factors can be found in our press release dated October 29, 2019.

The company has no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise..

I would now like to turn the call over to Joe Walsh. .

Thank you, Laurie. Today, Paul and I will review our financial results from the third quarter 2019. While I highlight -- I will highlight some key statements and then turn the call over to Paul to run through the financials..

We experienced another great quarter. EBITDA margins improved by 2.3 percentage points over the third quarter 2018, increasing to 36%. Year-to-date, we've generated $209 million of free cash flow and lowered our net debt to $782 million..

Our SaaS revenue, consisting of Thryv and Thryv Leads, continues to show improvement. We refined and enhanced our flagship all-in-one business software, Thryv, by releasing a number of new improvements, including integration of new payment processors, including Square..

Thryv Leads, which complements Thryv, continue to perform well. Small business owners can grow their customer base by generating leads through a single budget. These new leads automatically flow into their Thryv CRM. So small businesses can use the Thryv features to directly communicate with these new customers..

As indicated earlier this year, throughout 2019, we have focused on driving user engagement. We've seen positive results in increasing active usage and increased customer lifetime value. Additionally, our new corporate identity, Thryv, has been well received in the marketplace..

Now I want to turn the call over to Paul to take you through the financial results from the past quarter.

Paul?.

Thank you, Joe. We will now discuss in more detail our consolidated third quarter 2019 financial results released on our website on October 29.

I would like to point out that most of the financial measures that will be presented and discussed this morning were prepared on a non-GAAP adjusted basis, which provides more meaningful information to management and investors relative to the underlying financial performance of the company.

In addition, these non-GAAP financial measures are used internally by management for budgeting, forecasting and compensation..

Adjustments have been made to our 2018 GAAP results to remove the impact of accounting entries required following the acquisition of YP on June 30, 2017, and as such, all 2018 references are our adjusted pro forma.

Nonrecurring costs, including integration-related activities to achieve operational efficiencies and noncash expenses associated with long-term stock-based incentive compensation and pension expense, were removed from our non-GAAP adjusted results..

Non-GAAP adjusted EBITDA for the third quarter of 2019 was $130 million. We generated an adjusted EBITDA margin of 36% for the quarter compared to 34% margin in the same quarter last year, a 2 percentage point improvement..

Our total SaaS revenue, consisting of our flagship Thryv products, continue to grow, up 8% to $32 million in the third quarter of 2019 as compared to $30 million in the same quarter last year..

Internet Yellow Pages, or IYP, revenue declined 18% compared to the third quarter of 2018. We continue to face competition from Google and Facebook in the digital marketplace. However, IYP remains a valuable digital asset that provides a significant amount of cash flow for the company..

Search Engine Marketing, or SEM, revenue declined 26% in the third quarter compared to the prior year. This is primarily a reseller business, and we believe focusing on our owned and operated products provides the most value to our clients and shareholders, but we were able to continue offering this service at a solid profit margin..

Other digital, which reflects some of our historical revenue streams, such as websites, search engine optimization and display advertising, declined 25% compared to the third quarter of 2018, as we expected..

Print revenue for the third quarter was $163 million, a decline of 23% compared to the same quarter last year. The decline in our print revenue remained consistent with industry trends and recent historical rates..

We continue to manage the cost in this side of the business to maintain attractive cash flows while providing a great product and experience for our clients and users of our directors. For the third quarter of 2019, our variable margin was 74%, and our direct margin was 49%, both an improvement over 2018..

Adjusted free cash flow for the quarter was $57 million compared to $107 million in the third quarter of 2018. The decrease in our free cash flow of $50 million is primarily due to required pension funding, tax -- cash taxes and interest payments.

As previously discussed, we are now seeing a reversal of some of the positive variances related to cash management we experienced in the first half of 2019..

Let's now take a look at our net debt. The outstanding term loan and ABL balances as of September 30, 2019, was $784 million. We held $2 million in cash resulting in net debt of $782 million. We remain intensely focused on generating cash and reducing debt and are proud of our year-to-date progress on this goal..

Now I would like to turn the call back over to Joe for some closing remarks. .

Thanks, Paul. Overall, we're pleased with our third quarter results. We were successful in continuing to grow our EBITDA margins and generate free cash flow. We're dedicated to becoming a leading SaaS company, and we're confident about the trajectory of our organization.

We focus 2019 on driving user engagement with the software, and we've seen positive results..

With that, Laurie, can we open it up for some questions?.

[Operator Instructions] I am showing no questions at this time. I will now turn the call to Mr. Walsh. .

All right. Thank you, Laurie. Well, listen, there being no questions, we just want to thank everyone for their attention today. And I'll just wrap it up by saying that we're very pleased with the progress we're making with the business. Thank you. We'll speak to you, again, next quarter. Bye. .

Thank you. That does conclude Thryv's Third Quarter 2019 Conference Call. You may now disconnect your lines, and have a wonderful day..