The complex narrative of a company successfully reinventing itself, only to be met with skepticism and punishment from the market, presents a classic Wall Street paradox. Thryv Holdings, Inc. (NASDATHRY) stands as a prime example of this phenomenon. By nearly every operational metric, its multi-year transformation from a legacy print directory publisher into a modern Software as a Service (SaaS) provider for small-to-medium sized businesses (SMBs) is a resounding success. Its SaaS segment is posting impressive double-digit revenue growth, profitability is improving, and its AI-powered platform is winning industry accolades. This analysis dissects this perplexing disconnect, exploring the deep-seated reasons why the market is overlooking Thryv’s SaaS achievements. It delves into the heavy drag of its declining legacy business, analyzes recent execution stumbles that have shaken investor confidence, and examines the long-term catalysts that could finally force a re-evaluation of this complex and deeply misunderstood company.
From Yellow Pages to a Cloud Platform: A Legacy of Transformation
To understand the market’s current skepticism, one must appreciate Thryv’s century-long journey. The company’s roots trace back to the dominant era of the Yellow Pages, a business that was once an indispensable marketing tool for local businesses. Through a series of complex mergers, restructurings, and buyouts involving entities like Dex Media and YP Holdings, the company navigated the seismic shift from print to digital. This history, however, created a significant legacy business—print directories and digital marketing services—that, while profitable, was locked in a state of terminal decline.
The pivotal moment came with a strategic decision to pivot entirely toward a high-growth, high-margin SaaS model. The launch of the Thryv platform, a rebrand to Thryv, Inc. in 2019, and a 2020 NASDAQ listing cemented this new identity. This historical context is not just trivia; it is the fundamental reason for the company’s current dual-segment structure. A thriving, forward-looking SaaS business is shackled to the financial performance of a legacy “melting ice cube” that it is actively working to decommission by 2028, creating a complex financial narrative that many investors struggle to decipher.
Unpacking the Paradox: Why Good News Reads as Bad
The Heavy Anchor of a Melting Ice Cube
The single greatest factor clouding Thryv’s investment thesis is the overwhelming shadow of its legacy Marketing Services division. While the company’s SaaS segment is flourishing—reporting a 33% year-over-year revenue surge to $115.9 million in its most recent quarter—its legacy segment is contracting by design, with revenue falling 8%. When combined, these two opposing forces create a confusing and lackluster consolidated financial picture. Investors scanning top-line numbers see muted overall growth or even slight declines, failing to isolate the stellar performance of the SaaS business, which now constitutes 58% of total revenue and is the sole driver of the company’s future.
This “legacy drag” effectively masks the true health and trajectory of the enterprise, making Thryv appear to be a struggling legacy company rather than the high-growth SaaS provider it is rapidly becoming. The market is valuing the company based on its consolidated past, not its high-potential future. This structural complexity requires a deeper level of analysis than many market participants are willing to undertake, leading to a persistent and significant undervaluation relative to its pure-play SaaS peers.
When Execution Stumbles Cloud the Strategic Vision
While the legacy business provides structural headwinds, recent execution challenges have added to investor anxiety. Following its Q3 2025 earnings report, Thryv’s stock plummeted nearly 40%. Despite the impressive headline SaaS growth, the company missed earnings per share (EPS) estimates, lowered its full-year SaaS revenue guidance, and revealed that organic SaaS growth—excluding the contribution from its recent Keap acquisition—was a more modest 14%.
This deceleration, coupled with weaker-than-expected free cash flow, spooked the market. It fueled fears that growth was slowing and that management’s execution was not as flawless as previously believed. Analyst reactions were sharp, with firms citing “general poor company execution” while lowering their price targets. These stumbles gave credence to the bears and provided a tangible reason for cautious investors to remain on the sidelines, overshadowing the long-term strategic progress and complicating the investment thesis.
Growth Through Acquisition: A Double-Edged Sword
Thryv’s strategic acquisition of marketing automation platform Keap in late 2024 was a logical and powerful move to accelerate its SaaS transition, adding thousands of subscribers and enhancing its product capabilities. This move significantly strengthened its competitive position within the crowded SMB software market. However, this strategic positive came with short-term costs that further complicated the investment narrative for Wall Street.
The acquisition was partially funded through a public stock offering, which resulted in shareholder dilution, an action often met with short-term market disapproval. More importantly, the integration of Keap’s revenue made it more difficult for investors to assess Thryv’s underlying organic growth rate, a key metric for any SaaS company, as highlighted by the Q3 2025 results. While the acquisition undoubtedly strengthens Thryv’s competitive position for the long term, in the short term it has muddied the financial waters and added a layer of complexity that has contributed to the market’s confusion and punishing valuation.
Catalysts on the Horizon: AI, SMB Digitalization, and the Final Shedding of Skin
Looking forward, several powerful trends and internal catalysts have the potential to change Thryv’s narrative and force a market re-evaluation. The accelerated adoption of AI by SMBs plays directly into Thryv’s strategy, as its platform is increasingly infused with AI-powered tools for website creation, marketing, and customer communication. This positions the company at the forefront of the SMB digitalization wave, a secular trend that shows no signs of slowing.
Furthermore, the growing demand from SMBs for all-in-one integrated platforms gives Thryv a distinct advantage over competitors offering single-point solutions. The ultimate catalyst, however, will be the planned full exit from the legacy Marketing Services business by 2028. As this segment’s revenue dwindles to zero, the unadulterated financial profile of a pure-play, high-growth SaaS company will finally emerge. This event should force the market to value Thryv on its own merits without the distortion of its declining past, potentially unlocking significant shareholder value.
A Case for Patience: Seeing the SaaS Diamond in the Legacy Rough
The key takeaway from Thryv’s situation is that the market is currently mispricing the company by focusing on its consolidated, backward-looking financials instead of the forward-looking fundamentals of its core SaaS segment. For investors, the primary strategy should be to look past the noise of the legacy decline and analyze the SaaS business as a standalone entity. This involves scrutinizing key metrics like SaaS subscriber growth, average revenue per unit (ARPU), SaaS-specific gross margins, and seasoned net revenue retention.
For Thryv’s management, the path forward requires a relentless focus on execution—consistently meeting or beating guidance—and a crystal-clear communication strategy that helps investors understand the organic growth trajectory and the immense value being created within the SaaS business. Rebuilding Wall Street’s confidence after recent stumbles is paramount to closing the significant valuation gap. The company must prove that its growth story is both durable and predictable.
Awaiting the Inflection Point: Value Trap or Deeply Undervalued
Thryv Holdings’ operational transformation into an AI-powered SaaS leader for SMBs was demonstrably successful. However, its stock performance told a story of market skepticism, rooted in the complexities of its legacy business and amplified by recent execution hiccups. The central question for investors became whether Thryv was a classic value trap—a company whose legacy problems would perpetually outweigh its growth prospects—or a deeply misunderstood growth story on the verge of being properly recognized. The market’s reaction to its third-quarter results ultimately exposed a fundamental challenge in assessing companies undergoing profound, multi-year transitions where past metrics obscured future potential. This period required flawless execution from management and a new analytical lens from investors, who had to look beyond consolidated financials to see the value being punished by the broader market.
