• Revenue: $176.3 million, up 0.9% year over year.
• Pro Forma Revenue Growth: 4.3% year over year.
• Adjusted EBITDA: $44.5 million, representing a 25.3% margin.
• Adjusted EBITDA Margin Expansion: 140 basis points year over year.
• Payments Revenue Growth: 6.7% year over year.
• Total Payment Volume (TPV): $12.4 billion, 8.4% year-over-year growth.
• Subscription and Transaction Revenue: $137.6 million, up 3.7% year over year.
• Marketing Technology Solutions Revenue: $34.4 million, down 6.7% year over year.
• Adjusted Gross Profit: $117 million, with a margin of 66.4%.
• Cash Flow from Operations: $27.5 million.
• Levered Free Cash Flow: $23 million for the quarter.
• Cash and Cash Equivalents: $102 million at quarter-end.
• Debt Outstanding: $533.5 million, maturing in July 2028.
• Net Revenue Retention (NRR): 96% for core software and payment solutions.
• Fourth Quarter Revenue Guidance: $168 million to $172 million.
• Fourth Quarter Adjusted EBITDA Guidance: $43 million to $46 million.

• Warning! GuruFocus has detected 6 Warning Sign with EVCM.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EverCommerce Inc (NASDAQ:EVCM) reported third-quarter revenue that exceeded the top end of their guidance range.
• Adjusted EBITDA of $44.5 million surpassed expectations, representing a 25.3% margin and a 140 basis point expansion year over year.
• Payments revenue, excluding fitness solutions, grew 6.7% year over year, driven by an 8.4% growth in Total Payment Volume (TPV).
• The company continues to make progress on transformation and optimization initiatives, including hiring a key leader for the EverPro vertical.
• EverCommerce Inc (NASDAQ:EVCM) ended the quarter with $102 million in cash and cash equivalents, maintaining $190 million of undrawn capacity on their revolver.

Negative Points

• Marketing technology solutions revenue declined by 6.7% from the prior-year period, falling below internal expectations.
• The annualized net revenue retention (NRR) for core software and payment solutions was 96%, impacted by the anniversary of a price increase in two high-velocity, lower ARPU solutions.
• The sale of fitness solutions impacted year-over-year GAAP comparisons, with no contribution from these solutions in the third-quarter results.
• Despite growth in payments revenue, the company is still capturing only a fraction of the potential wallet share from payments processed through their system.
• The company anticipates that some transformation investments will occur in the fourth quarter, which may impact short-term financial performance.

Q & A Highlights

Q: Can you talk about specific initiatives EverCommerce is doing to enhance cross-sell opportunities and increase wallet share? A: Eric Remer, CEO, mentioned the Edge program, which provides rewards and benefits to customers, particularly in the contracting space. This program has seen significant uptake and is part of an integrated sales motion focusing on selling core systems of action with integrated payments and reputation management. Evan Berlin, COO, added that this integrated approach has led to significant growth in new payments attached to new customers.

Q: How does EverCommerce plan to drive organic growth in 2025, and what are the key catalysts for reacceleration? A: Eric Remer, CEO, stated that the company is focusing on expanding its customer base and integrating sales processes to increase the adoption of multiple solutions, particularly payments. The company is reorganizing its go-to-market strategy and sales teams to enhance cross-sell and upsell opportunities. The aim is to leverage the large market opportunity and increase wallet share from existing customers.

Q: Are there any changes in the broader SMB purchasing environment, and how did sales linearity look throughout the quarter? A: Evan Berlin, COO, noted no significant changes in the SMB purchasing environment. The company saw continued ASP expansion and compressed sales cycles in core solutions, indicating strong execution in new customer acquisition.

Q: What is the status of EverCommerce's business optimization efforts, and what are the key areas of focus? A: Ryan Siurek, CFO, highlighted ongoing efforts in real estate portfolio consolidation and vendor consolidation. While specific savings targets were not disclosed, the company has a strong inventory of opportunities and is executing on them to improve margins and reinvest in growth.

Q: How is the new organizational structure in EverPro expected to impact the business, particularly in terms of R&D and sales? A: Eric Remer, CEO, explained that the new structure focuses on decentralizing decision-making to be closer to customer needs. This includes having dedicated marketing and R&D resources within the EverPro vertical, allowing for more targeted and effective investments and maximizing opportunities within the vertical.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.