Scott Berg: That’s very helpful. Thanks for the additional color there. And then how should we think about the decay in the Marketing Services business going forward? Obviously, you just answered the question that we all know you’re pressing into that base a little bit to hopefully purchase and migrate over to some of the SaaS solutions. But I did see you reduced the full year revenue amount of that segment. Why don’t you help unpack, is that really more a function of how you’re pressing on these customers to try to move your SaaS solutions or is there another macro element right now that might be giving some weakness to that business because we are seeing some SMB pressures out there today?
Joe Walsh: That’s a great question. We certainly read the same headlines you do. And we do hear some whining out there in the market about low real estate transactions or whatever that sort of affect things. But our small businesses are, they’re sort of — I think I’ve told you before, they kind of do the nasty things. They do all when stuff is broken, you call them. You crack your tooth; you call the dentist. You’re getting divorced from your wife; you call your lawyer. Your car won’t start, you call your mechanic. These are our guys. These are our customers. The air conditioning doesn’t work and your family is hot, so you call the AC guy. That’s — those are our customers. And they tend to be very resilient and just chug on through.
And they tend to be the more mature businesses in the market. We have not been big sellers of the new Start business. We — the price point in our software products cut in at 200 a month and go quickly up from there. And there’s plenty of free and really cheap tools available online that if you have a tiny, tiny start-up, you should go use those and graduate to something like Thryv later. And we’re more of a premium brand in the market that people look to grow up to eventually to come to a Thryv. So anyway, in terms of macro, our guys are doing fine. They’re chugging along. They always complain. But as you can see, they’re spending, they’re buying. Back to your question now about what do I see in terms of the melting iceberg, make no question, make no mistake about it.
We are definitely going and sort of purposely beating up the transition. In an ideal world, we want to be a SaaS business, and we don’t see the Marketing Services business forever in our future. We see us winding that down. So we’re working it hard and out calling on customers, offering them interesting proposition to come into the SaaS world, and they’re listening, we’re having good traction with that. So I think I’ve mentioned before that, Scott, I think when you started covering us, we were like 12% SaaS revenue. We’ll be 40% this year. We’re nearly there now. And we’ll pass 50% next year. We’ll be a majority SaaS revenue business next year. So part of that is just the success we’re having hunting in the zoo.
Scott Berg: It’s been a good business transition, no doubt, looking forward to seeing it hit 50% next year. Congrats.
Joe Walsh: Thank you very much.
Operator: Our next question comes from the line of Zach Cummins from B. Riley Securities. Please go ahead.
Zach Cummins: Hi, good morning. Thanks for taking the questions. Joe, I really wanted to lean into kind of the multi-center adoption side of it. With the changes that you’ve made to your sales commission structure, can you talk about how just the overall go-to-market strategy has evolved? And could we see potential acceleration in that multi-center strategy adoption as we kind of progress throughout this year?
Joe Walsh: Yes, it’s a great question because it really — that’s kind of the rudder that drives the ship in some ways. And we have gradually increased the incentive to sell software and gradually sort of decrease the part of your comp that comes from selling the legacy products each year. Obviously, it’s been a gradual transition. We couldn’t just flick a switch because it would have left the sales force sort of up in the air. And we love our sales force. We take good care of our sales force. They’re like the most important guys here. So we really kind of run our company through the sales reps’ windshield. So yes, this year, as we rounded the bend going into 2024, we felt it was time for the next logical step in moving that rudder of compensation.
And we moved it quite a bit, and we put a lot of focus on selling multi-centers. And it’s just been now three months or so since we’ve done that, but the results have been dramatic. They are doing it. They were ready to do it anyway, they were wanting to do it anyway. And now the pay really lines up for that. And so they’re very focused on it and having a lot of success. And so when I model the business, when I think about how this plays out for the rest of this year and going into next year, I think that, that this time last year, it was less than 1%, we had more than one center. At the end of this last quarter, it was 8%. I see that jumping in leaps and bounds each quarter moving forward with the attendant benefit on ARPU and NDR and all the other bits that come with it.
And as you’re aware, our strategy is to try to build and roll out a new center each year until we get our full platform built out. And we’re on track to do that. We now have Rees Johnson who’s amazing into kind of lay his golden hands on it and help take it to even another level. So I think a big part of the first leg of this journey was us getting that 70,000 subs, getting a bunch of happy engaged customers using software. That’s really hard to do. I just can’t tell you how hard it is to do that. With that base now, though, we’ve got a happy group of growing customers. And obviously, we’re adding more to it, and we’ll keep adding more to it. But we can now sell into that base, two centers, three centers, four centers and really be their software provider and build that out.
That will provide a tremendous amount of growth. And while we will keep adding new subs, it won’t be just relying on adding subs like it was when we had a single center. So yes, multi-centers is at the core of this. And for an analog, I think you can look at HubSpot and what they’ve done. HubSpot is growing at a certain rate when they had one hub. They were growing a little faster when they had two hubs. But as they built out the full platform, they started to get synergy between all the hubs. You saw the growth accelerate. They’re obviously working above us in the market. We’re a HubSpot customer. Their ICP is about 2,000 employees. But we’re sitting beneath them doing a very similar thing and we admire what they’ve done.
