EverCommerce Inc.

Good day. Thank you for standing by and welcome to EverCommerce Incorporated 3rd Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Brian Danew. Please begin, sir.

Good afternoon, and welcome to EverCommerce's earnings conference call for the third quarter of fiscal year 2021, which ended on September 30th. On the call with me today is Eric Reamer, EverCommerce's chief executive officer, Mark Thompson, EverCommerce's chief financial officer, and Brad Korch, EverCommerce's new SVP and head of investor relations. A complete disclosure of our results can be found on our press release issued today, which is available on the investor relations section of our website and on our quarterly report on form 10Q to be filed with the SEC. Today's call is being recorded and a replay will be available from the conclusion of the call. Statements made in this call may include forward-looking statements regarding our financial results, products, customer demand, operations, the impact of COVID-19 on our business, and other matters. These statements are subject to risks, uncertainties, and assumptions and are based on Magnet's current expectations as of today It may not be updated in the future. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. In addition to any risks that we highlight during the call, important factors that may affect our future results are described in our most recent SEC reports and today's earnings press release. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP historical measures is provided in our press release and investor presentation which are posted on our investor relations website at investors.evercommerce.com. The primary differences being depreciation and amortization, stock-based compensation, acquisition-related costs, and other non-recurring costs. In terms of the agenda for today's call, Eric will provide a quick overview of our third quarter results, as well as our market opportunity, growth strategy, and an overview of our recently announced acquisition, Dr. Cardo. Mark will provide a detailed review of our third quarter results, as well as our guidance for the fourth quarter and full year 2021. With that, let me turn the call over to Eric.

Thank you, Brian. Welcome, everyone, to EverCommerce's third quarter financial results call. Let me start by welcoming Brad Korsch, the EverCommerce team. Brad joins us from Denver-based Zayo Group, which some of you may recall was publicly traded until they were taken private at a $14.3 billion valuation. I'm excited to share some updates since our last call, including a strong third quarter and some additional color on our recently announced acquisition of Dr. Crono, which is a great strategic fit and meaningful expands our footprint in health services. I would like to begin with a few highlights of our Q3 financial results, which exceeded our guidance for both revenue and adjusted EBITDA. We reported total revenue of $128.5 million, up 44% year-over-year, and up 20% year-over-year on a pro forma basis. adjusted EBITDA of $29 million, representing a 23% margin. We are pleased with this very strong performance, which underscores the power of our suite of software solutions, purpose-built for the service economy. We offer our customers differentiated, modern SaaS applications integrated with other value-added solutions, such as payments, customer engagement, and marketing applications, and have combined these with best-in-class, digitally-driven customer acquisition model. This drives a unique value proposition, enabling EverCommerce to efficiently sell and scale into this fragmented trillion-dollar market. We are just at the beginning stages of helping small service businesses digitally transform how they work and interact with their customers. To drill down into our approach a little more, a key element of our strategy is to deliver vertically and micro-vertically tailored solutions that solve specific business problems for SMB service providers in the home services, health services, and fitness and wellness vertical markets. This sounds straightforward in theory but is unique in practice as you have to have the right solution for each customer. A physician practice, roofer, beautician, gym owner, and plumber all need software to help run their data operations, but their needs are different and unique to their markets. To be successful in these markets, you have to provide solutions that solve these unique pain points and are ready to use out of the box with immediate time to value. Our system of action business management solutions, the core solutions for SMB service providers to manage the business are how we attract and land new customers. This gives us a huge opportunity to cross-sell horizontal solutions like integrated payment processing, customer engagement, lead generation, and marketing technologies that are broadly applicable to all of our customers. We have seen great success cross-selling our integrated payment solutions. To give you a sense of the scale of our payment business, at the end of Q3, our estimated annualized run rate of total payment value, or TPV, was over $8.6 billion. This represents a 15% increase since the end of 2020. As exciting as the success is, we've only scratched the surface of our opportunity integrated payments, which we estimate exceeds $77 billion just among our current customers. To further enhance our cross-sell progress and integrated payments and other horizontal solutions, earlier this year we hired Stone D'Souza as our Chief Operating Officer. In this role, Stone is spearheading our efforts to take advantage of this huge integrated payment opportunity as well as drive additional product integrations and go-to-market campaigns similar to his experience at both Intuit and Sage. Refining and optimizing our up-sell cross-sell strategy is a key priority and a long-term revenue growth driver for the business. A component of this strategy will be to create consistent branding of our solutions that we believe will raise awareness and simplify the selling process over time. For example, we recently simplified and consolidated the branding of our performance marketing solutions. Under the EverConnect brand, which connects businesses with consumers shopping for services in the local area, we've consolidated three of our existing digital marketing businesses and will make lead generation and branding campaigns simple to tailor to our customers' needs. Looking at the performance of our three verticals during the quarter, we saw positive results of our strategy. EverPro, which focuses on home services, continues to be our largest and fastest-growing segment. Historically, these micro-verticals like plumbing, landscaping, and general contracting had seen some of the lowest technology adoption of any market. But in recent years, as demand for services has grown and consumers have gotten used to digital engagement in all other areas of their life, These small businesses have come to recognize they must deploy technology to increase efficiency and meet customer preferences. The changes that were thrust upon many of these businesses due to the pandemic restrictions over the past 18 months underscore the value proposition of our solutions, which includes a variety of contactless digital solutions. Our SMB customers recognize going back to the old way of doing business is not an option, which we believe will accelerate digitization in years ahead. and we feel we are well-positioned to take advantage of this increasing demand for solutions to help SMB service providers better grow their business, manage their operations, and retain their customers. Everwell, our fitness and wellness vertical, experienced sequential improvement despite pandemic-related headwinds due to restrictions on certain micro-verticals like gyms and fitness boutiques in a few select geographies as of the UK, New Zealand, and Australia. While fitness and wellness are as small as vertical, we are pursuing a number of exciting growth initiatives, leveraging the breadth and depth of our vertically tailored solutions. A good example is expansion of our relationship with World Gym International, which has selected EverCommerce Solutions to be the designated supplier of club management, billing, and CRM software at the North American locations. An existing user of our CRM solution provider, WorldGM viewed the combination of the strength of each of our individual solutions and our ability to offer them as an integrated, complete offering as a critical differentiator. EverHealth, our health service vertical, had a strong quarter and is benefiting the growing demand for patient engagement solutions due to patients' desire for more personalized, consumer-like experience. In today's world, patients don't want to wait on the phone to schedule or reschedule an appointment or get test results. They want it at the tip of their fingers. Similar to the value they receive through our billing and practice management solutions, physicians and practitioners are recognizing the positive impact of introducing patient engagement solutions to improve their experience, which ultimately drives higher revenue and upgrade efficiencies for the practice. We also recently announced a significant acquisition that will further build out our capabilities in EverHealth by adding an important system of action. Back to Chrono is an all-in-one cloud-based practice management EHR billing solution that serves more than 4,600 independent practices and 13,000 providers across various medical specialties. Dr. Crono is at the forefront of digitizing the patient experience of leveraging mobile technologies to streamline engagement and create a true consumer experience. Dr. Crono is a terrific example of a strategic approach to M&A and meets all of our key criteria. We're extending our reach and key vertical market with a very robust system of action. With its large customer base, Dr. Crono also expands our market share within health services. With the acquisition, we are also increasing our opportunities to cross-sell embedded payments and other EverCommerce customer engagement solutions. And from a financial and operational perspective, Dr. Crono's growth prospects are quite attractive, and onboarding their solutions to our centralized platform will drive significant efficiencies. Once we close the acquisition, expected to be mid-November, we intend to quickly onboard Dr. Crono's solutions and our plan to cross-sell embedded payments patient engagement, and marketing technology solutions to the more than 4,600 physician practices. We continue to execute well in centralizing operations, integrating and cross-selling solutions, which are core components of our growth strategy. A great example is Service Fusion, a leading provider of software for field service customers, including HVAC refrigeration, plumbing, electrical, appliance repair, garage door, equipment, and security businesses. We acquired this solution in October 2020 and immediately began the process of integrating payments, marketing, and customer engagement solutions. The results have been impressive in a very short period of time. We've increased our monetization of payment volume by 38% and attachment rates by 11%. In Q3, we launched an integrated customer marketing module powered by our customer lobby software, and approximately 80 Service Fusion customers have adopted it within the first 90 days. Finally, leveraging our centralized services, we quickly optimized Service Fusion's marketing tactics and KPI utilization, resulting in a 24% increase in customers acquired through digital channels. The net result has been a 15% increase in ARPU in a short time since acquisition. These results are an excellent example of how we can quickly optimize newly acquired solutions. Before I turn over to Mark, I want to finish by reinforcing how pleased we are with our performance. We have momentum across our business and are tracking well against our near and long-term objectives. We are delivering on our organic growth targets, and acquisition of Dr. Crono is a great example of our M&A strategy in action. We are rapidly approaching $1.5 billion in annual revenue. We are confident in our ability to grow to many times that size while also generating significant profitability. Our results show our strategy is successful, and we believe we are in a great position to drive incredible value for our customers and shareholders over time. I'll now turn over to our CFO, Mark Thompson. Mark, over to you.

Thanks, Eric. Today I'll review our third quarter fiscal 2021 results in detail and provide our outlook for the fourth quarter and full year of fiscal 2021. Total revenue in the third quarter was $128.5 million, up 44% from the prior year period and above the high end of our Q3 guidance. And within total revenue, subscription and transaction fees were $91.8 million, up 53 percent from the prior year period, and marketing technology solutions were 31.6 million, up 30 percent from the prior year period. Q3 includes revenue from Timely and MDTech, which were the acquisitions we closed during the quarter. And please recall that our guidance for the third quarter was inclusive of Timely, which is a large majority of the acquired revenue in the quarter. M&A is a core part of our growth strategy, and as a result, we believe it's important for investors to evaluate our business growth on a pro forma basis, which is how we measure and manage the business internally. We calculate our pro forma revenue growth as though all acquisitions closed as of the end of the latest period were closed as of the first day of the prior year period, including before the time we completed the acquisition. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business. We're very pleased with our pro forma growth rate for Q3, which was 20% year over year and 21% for the year-to-date period, compared to the same period in 2020. We experienced strong growth across all three of our core verticals and our various products. Now let's review the income statement in more detail. As a reminder, unless otherwise noted, all metrics are non-GAAP, and we provided a reconciliation of GAAP to non-GAAP metrics in our press release. Adjusted gross profit in the quarter was $85.6 million, representing an adjusted gross margin of 67 percent in line with the third quarter of fiscal 2020. Now turning to operating expenses, sales and marketing expenses were $24.3 million, or 19% of revenue, up from 13% of revenue in the prior year period. This increase was primarily driven by continued investments and growth through our various marketing channels and personnel. Product development costs were $12.4 million, or 10% of revenue, up from 9% of revenue in the prior year period. This increase was due to investments and additions to our technology teams to support our various solutions, as well as our centralized security operations, information technology, and cloud engineering. G&A expense was $20 million, or 16% of revenue, up from 13% of revenue in the prior year period. The year-over-year increase was driven primarily by investments in scalable operations and incremental costs associated with being a public company. Our business is built around our centralized operating model, which aggregates many of the G&A functions of our various operating units, which we believe will drive operating leverage over time. This has also been a key component of our ability to scale as quickly as we have. We have been and will continue to invest in the infrastructure required to support our rapid growth, scalable operations, and being a public company. We expect that these investments will accelerate in Q4 and into 2022, following our recent IPO in July. Q3 adjusted EBITDA was $29 million, above the high end of our Q3 guidance. Adjusted EBITDA margin was 23%, down 10 percentage points versus the year-ago quarter, reflective of our investments in growth and scalable operations and the impact the public company caused. On a gap basis, our Q3 loss from operations was $4.1 million, compared to operating income of $3.7 million in Q3 2020. Now turning to the balance sheet and cash flow, We ended the quarter with $98.3 million in cash, cash equivalents, and restricted cash. Total debt at the end of the quarter was $385.1 million. Total net leverage as calculated for our credit facility at the end of the quarter was approximately 2.2 times. The purchase price of Dr. Crono is $182.5 million. We intend to fund the acquisition with $155 million of availability on a revolving credit facility and cash off our balance sheet. Proforma net leverage is approximately 3.7 times consistent with our financial policy. I'd now like to finish by providing our outlook, beginning with the fourth quarter. For Q4 revenue, we expect total revenue of $129.5 million to $131 million, and we expect adjusted EBITDA of $27 million to $28 million. For the full year fiscal 2021, We are increasing our outlook for total revenue to $484 million to $485.5 million, and we expect adjusted EBITDA of $105 million to $106 million. Please note that our outlook for Q4 and the full year 2021 includes approximately one-half a quarter of contribution from Dr. Crono. We expect that Dr. Crono will contribute approximately $4 million to revenue in the fourth quarter and lose approximately $1.5 million in the justity of the dot. For 2022, we expect that Dr. Crono will contribute approximately $40 million of revenue for the full year. To wrap up, EverCommerce delivered strong third-quarter results that were a continuing indication of our ability to generate high levels of organic revenue growth and effectively execute on our M&A strategy. We're at the very early stages of digital technology adoption by the service SMB companies that will transform how they manage all aspects of their business. We believe EverCommerce is in a great position to power this transformation and continue to deliver strong top-line growth and substantial profitability for the foreseeable future. Operator, we're now ready to begin the question and answer section of the call.

Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, just press the pound key. Please limit yourself to one question and one follow-up. Your first question comes from the line of Brad Reback from Stifel. Your line is now open.

Great. Thanks very much. Eric or Mark, I'm not sure who this is best for, but can you just remind us of the seasonal aspect of your business in 4Q, if there is any?

Sure, Brad. Thanks for the question. It's Mark, and I'll take that. Are you referring to seasonality that we might experience in Q4 forward, or are you talking about in Q3?

In Q4 going forward, are there seasonal aspects of usage or engagement?

Yeah. Thanks for clarifying. So, you know, across the verticals, we do have seasonality, and it's sort of between products and verticals. If you think about the verticals, home and field services, there are certain micro verticals, roofing, for example, where geographically you might not have as much of that activity, certainly landscaping, things like that. So within home services, there are categories that experience seasonality, and then within payments in general and across the board, there is a reduction in service commerce activity, actually, around the holidays. And that could be the end of the year. That could be specific holidays in Q4. And that would really apply, frankly, to health services as well as home and field services and even to a certain extent some of the fitness and wellness categories as well. And then certainly, you know, within home field services, it's not just usage-based revenue that might experience a little bit of seasonality in Q4. You'd also get a little bit of seasonality around marketing technology, for example, lead gen and things like that.

That's great. Thanks very much.

Your next question comes from the line of Matt Hedberg from RBC Capital Markets. Your line is now open.

Hey, great. Thanks for taking my question, guys. You know, Eric, you guys are exposed to, obviously, wide swaths of domestic SMB markets. And I'm very curious. I mean, you gave a great overview of the various categories that you guys, you know, go after. Just from a high level, though, can you just sort of level set us on how you feel about the overall SMB demand market? I know, again, it's different by vertical. And I guess I'm wondering specifically, are you seeing churn rates start to improve as we come out of the pandemic?

Well, thanks for the question. I'm actually going to introduce Matt Feierstein, our president, to join us as well. Matt, do you want to take that one?

Yeah, absolutely. I think, Matt, I think you got to the meat of it at your last part of the question, which was basically surrounding churn in the S&P markets. So absolutely, Q3 was a strong quarter from a retention standpoint. Our annualized net revenue retention is now approximately around 98%. In the past, we've let you know that our monthly net revenue retention was plus 99%. We did continue to see nice, strong performance there in Q3. So we are certainly seeing that metric as an indicator of continued health of our ability to allow our merchants to utilize our solutions and continue to grow in those solutions.

That's super helpful. Thanks, Matt. And then maybe one for Mark. Just to be clear, I think you said in your original Q3 guidance you included Timely, but you didn't include MDTech, if I think I heard you right. So I guess I'm wondering, you guys came in, I don't know, maybe $5.5 million above your midpoint of your guidance. Can you help us with how much of that was MD tech versus just sort of organic upside in the business?

Could you repeat that? You broke up there at the end. You said how much of that was, of that kind of 5 million was MDTAC within the quarter?

Yeah, MDTAC is a small tuck-in. I mean, not a huge component of it. And frankly, you know, timely was in the guidance. You're correct about that, Matt, so let's level set on there. But, you know, when I say small tuck-in, I mean, think less than a million bucks.

That's great. So effectively what you're saying is that most of the upside you guys produced was sort of organic or, you know, stuff that you previously called out as inorganic components.

Correct. That's right.

Great. Thanks, guys.

Your next question comes from the line of Bevan Shaw from Deutsche Bank. Your line is now open.

Great. Thanks for taking my question. I guess just following up on that, just given the strong performance and pro forma growth continues to impress, Can you maybe just provide any additional insight into what's driving some of that strength versus your expectations? Anything specific to call out from any of the verticals or from a cross-sell perspective of some of your horizontal solutions?

Sure. Thanks for the question, Bob. And I'll start and I'll turn it over to Matt. But just generally across the verticals, I mean, you know, we saw great, good, solid performance across Q2, or excuse me, across all the verticals in Q2. That's really continued into Q3. And, you know, the drivers are certainly just the sort of overall economy and the macro dynamics within each of those we've talked about before. Nothing really specific to call out other than fitness and wellness continues to improve sequentially through the year. But why don't I turn it to Matt for more around the nuts and bolts.

And thanks again for your question, Bob. From an execution standpoint, certainly like in quarters past, new customer acquisition continued to be a strong pillar of that growth. And you mentioned that the embedded growth opportunity from cross-sell into our 500,000-plus customer base. We mentioned the growth in the TPV statistic, you know, now north of $8.6 billion. And when you look at that over a year-over-year basis, plus 20%. We are absolutely continuing to see strong inroads in that cross-sell growth for payments. And as you heard from the materials as well, The customer engagement applications that we're integrating into our system of action solutions, we're beginning to see really, although in the early innings, nice uptake in cross-sell there as well.

And one thing I'll just add, and this is just a general theme and goes across many of our answers, but we are experiencing the digitization of the service economy is happening. That tailwind is picking up, and we are on the kind of forefront and leading edge of enabling that digitization.

Super insightful. Just a quick follow-up. I mean, you noted on your call that you've recently integrated and branded some of your performance marketing solutions into EverConnect. Just given the strong product enhancements you've made there, how should we think about the strategy for accelerating adoption of some of these marketing solutions from a go-to-market perspective? Is there anything specific you need to do from a go-to-market perspective to really drive more cross-sell adoption here?

Again, I think the EverConnect example is really a great example of where we're looking at taking this consolidated approach to branding and the consolidated approach to the underlying operations of what previously were discrete solutions operations, bringing them together, and really, what's that going to do? It's going to enable a better customer experience. It's going to allow us to cross-sell more effectively. And to your point, it's to create a more efficient go-to-market expansion in the markets we serve. And EverConnect, today that is largely focused on home services. So I think that was to the heart of your question. You know, that is something that last quarter we talked about the progress we've made in EverHealth. This quarter we made strong progress in EverConnect. And as we go forward, we do expect not to continue to utilize the brand equity in those existing brands, but also to introduce more of this EverCommerce brand to really make our go-to-market more efficient.

Got it. Congrats again.

Thank you.

Your next question comes from the line of Samad Samana from Jefferies.

Hi, good evening, and thanks for taking my questions. Maybe first just one on the M&A front, but now that you guys have established a solid track record in the public eye, how is that helping your own ability to acquire other companies? And I'm just curious if we should see that flywheel either pick up in cadence or should be pretty consistent with what we've seen, and then I have a follow-up.

From an M&A perspective, I think the last five years we've built a reputation of being great buyers of companies. We do what we say we're going to do, and I think being public and being more visible has only enhanced that. I think in terms of what we've done historically, this year will be very in line with what we kind of did before. last year, and I think in the future, history is kind of a good representation. We continue to be very disciplined. You know, you kind of got some high-level numbers of what we expect, 22 of chrono and the purchase prices in the press release as well. So we'll continue to be thoughtful and strategic and find opportunities that we feel are going to help the overall ecosystem, but also be disciplined in finding those opportunities.

Great. And then, Mark, you guys are obviously helping to digitize the physical SMB economy. I'm just curious, as you think about maybe whether it's the fourth quarter guidance itself or maybe even over, let's say, a more 12-month-ish type of outlook, when you think about the growth of the business, how much of it is improvement of health at your existing customer's as they continue to get back more and more after what's been an uneven recovery versus the new customer acquisition side. Maybe how should we think about that algorithm over the next kind of quarter and 12 months?

Well, I'll take a shot at this, Samad, and then let Eric and Matt chime in because I think we all might have a slightly different perspective. But to me, they're one and the same. I mean, digitization is driving new customer acquisition, i.e., folks out there finding that in this world they're strapped for time and need efficiency, and we have the solutions they need to better grow their business, manage their business, and drive retention. And then certainly within our existing customer base, Our motion around cross-sale creates an incredibly long tail into an embedded opportunity that this is not something that's going to be a spike up. It's just going to gradually stack up as we go on. And obviously, as we cross-sell more than one solution into those customers, The longer tail of that is improving retention with those customers in general and so forth. So why don't I pass it on?

I think we discussed this when we talked last, but we still feel like we're at the second inning of the opportunity with the upsell-cross-sell. I mentioned in the... In the earnings call, we brought on a new COO, Stone D'Souza, to really focus his energy. His main focus is taking advantage of that opportunity to cross-sell integrated embedded payments, market technologies, as well as some of our engagement solutions, and created a team around to make that happen. So I think over the next... Again, quarter, year, and then years to come, I think you'll see even more improvement and even more cross-sell and more penetration within those categories. Matt, anything you want to add to that?

Yeah, I mean, just to your question about recovery and where that is from a growth sector standpoint, I think, you know, we talked about this last quarter, but we've seen a lot of recovery in past quarters, specifically in the verticals of growth. home and field services, you know, certainly not as longstanding impacted by the pandemic. Health services has been recovering for several quarters. And, you know, as we look at fitness and wellness, you know, outside of certain verticals, sorry, certain geographies in Q3, very discrete geographies internationally where there was still just a little bit of lockdown impact, we really are seeing that recovery as we exited Q3 and into Q4. So we look at that recovery portion of growth as really in the rearview mirror.

Just one very last point. Matt mentioned kind of a couple micro areas. We did acquire Timely, which was very excited about the opportunity. Their main business is in Australia and New Zealand in the fitness and wellness space. And we definitely had some headwinds in Q3 based on the lockdown. And that was probably the only kind of headwinds we had. But in spite of that, we still had a really great quarter across all the verticals.

Great. Really appreciate the thoughtful and thorough answers. Thanks again.

Your next question comes from the line of Brent Braceland from Piper Sander. Your line is now open.

Hi, this is Clark Jeffries on for Brent. First question is, you know, one thing that stood out in the materials was the discussion of Dr. Crono as an integrated payment opportunity. I just wanted to understand, you know, where does the payment opportunity sit today for EverHealth? How meaningful is it being the software billing solution and cross-selling payments? And what are you seeing in terms of capturing the full volume of the practice versus, you know, maybe building volumes at the terminal versus the whole bill, you know, if that helps kind of clarify what I'm asking. Thanks.

Thanks for your question. I appreciate that. I'll start. This is Matt. when we look at something like Dr. Crono and health services in general from a payment opportunity perspective, we are absolutely excited and have been capturing, from an embedded standpoint, further and further more of the opportunities that exist within the ecosystem. So when you think of Dr. Crono, we think of a core system of action, EMR and PM, where absolutely payment integration and patient engagement and the capture of those payments, either in person, or through non-in-person methods is an absolute opportunity. And we look at Dr. Crono much in that same sense. Some of our existing solutions as well from that EMR and PM standpoint, we have strong payment integrations that continue to grow in that space as well.

Great. And then, you know, just to follow up, I think we've been asking a lot of questions on, you Just one quick housekeeping item. Could you maybe help us understand what is implied on a pro forma basis for Q4? It feels like pro forma has been on an accelerating trend, but given this commentary of digitization, I just want to understand if it feels different, if it feels sustainable, and what we could think about the durable growth rate from here.

Yeah, I'll start in the marketing. We've kind of gave the guidance during the IPO Roadshow and since that we believe we'll be growing in the 15 to 20% organic growth rate for many years to come and we see that as a similar in Q4 2022 and I think for years to come after that. Mark, any thoughts on that?

Yeah, I mean I think everything feels sustainable as we've seen it come through Q2 and into Q3 and I think That's a big part of the excitement we're feeling about the business. I mean, and going forward, we see that as well. We absolutely will experience some Q4 seasonality. That's just part of the business. But, you know, we expect to carry the momentum that we created this year into next year as well.

Perfect. Thank you very much.

Your next question comes to the line of Alex Klar from Raymond James. Your line is now open.

Thanks. Eric or Matt, I wanted to follow up on EverConnect. And just in terms of are you able to quantify the opportunity to kind of drive upsell on renewal for the broader solution now compared to your existing base that may have only had one or two of those products?

And your question was specifically, Alex, about EverConnect.

Yeah, that's right. Well, in general, as you combine solutions together, the kind of upsell opportunity now with a broader functionality versus some customers that may only have had one of those products, but EverConnect specifically, I guess.

Yeah, certainly from an EverConnect standpoint, we're absolutely in the early innings, I would call it, the top of the first in that this just went to market in the end of October. We took the brand to a very important industry trade show and launched it there at the LeedsCon conference in late October. So early innings, and we will certainly get back to you as we're able to give you more finite metrics on that. how the brand drives kind of multiple product sales. But when we look back at some of our EverHealth, you know, consolidated brand usage over the last several quarters, those are trends that we actually can see real progress being made in terms of presenting a more consolidated set of solutions at the time of sale and actually driving multiple products at that sale, at the point of sale, and then in follow-up. So we are seeing... Again, very early innings, that strategy of a consolidated brand approach paying off in terms of multiple products being taken at the point of sale.

Okay, great. And then just to follow up on the nice win with World Gym, can you just talk about new deal sizes broadly? And if you're seeing those kind of grow, the opportunity to kind of grow with multi-location type businesses increase within your pipeline?

Yeah, absolutely. Thanks for that follow-up. We're certainly excited about that, obviously. That's why we've put that out there in the press. When you think about what we're doing from a micro vertical end-to-end integrated solution set, this is kind of core to our thesis. This is bringing two solutions together. and being able to actually take that a bit upmarket. So you rightly point out World Gym, a little bit more upmarket, bringing together, as we talked about, our member management solution, our billing solution, and our marketing automation solutions to really fulfill that kind of end-to-end integrated micro-vertical solution set for a more upmarket customer. So we're excited about the World Gym win in North American Fitness, and we are excited about the wins that we believe are on the tail of that.

All right. Thank you. And, Brad, welcome to the team.

Our next question comes to the line of B.J. Hines from Canaccord. The line is open.

Hey, guys. This is Luke on for D.J. Thanks for taking the question. So you guys, of course, just hired your new COO. I was wondering if, you know, any incremental initiatives he plans to implement are obviously still probably in the planning stages, but could you just give us an idea or a sneak peek into maybe some of the initiatives or strategies he might have, you know, planned to drive additional cross-outs?

I'll start with that and I'll let Matt kind of, thank you for the question. I'll let Matt kind of add on to that. You know, if we think about Him joining right before our IPO has been with us the last, you know, really a little over a quarter. Stone's focus for really the remainder of 2021 was a lot of testing, a lot of focus on building infrastructure. Focused on that, one of the core things is embedded payments, integrated payments, and a lot of the upsell, cross-sell. Going into 2022, one of the initiatives I'm most excited about is taking that testing, taking that learning, and taking the infrastructure that Stone is actually putting together and starting to see some real results from and see additional penetration within that cross-sell. Again, focused not primarily, but one of the top things on embedded payments is first and foremost, that is our lowest hanging fruit, and we've been doing that for quite some time. And then second, the additional marketing technology and customer engagement solution. Matt, you want to add to that?

Yeah, and you think about, again, his experience at Bolt, Intuit, and Sage doing very similar things. You know, really when you look at effectuating that cross-sell through the further integrations, as Eric talked about, of embedded payments, of customer engagement solutions into our business management systems of action, Stone is really taking a methodical test and learn approach, utilizing data to create programs that across those systems of action solution customer bases and those value-add products to really drive incremental cross-sell success. So, again, we're excited to talk about those results in coming quarters as we're able to further effectuate the programs.

Excellent. Thank you.

Again, as a reminder, to ask a question, please press star 1. Your next question comes from the line of Kirk Materni, from Everett Coriza.

Thanks very much and congrats on the quarter. Eric, I was wondering if you could talk a little bit more about when you talk about cross-sell and up-sell, how much are you seeing in terms of greenfield cross-sell and up-sell versus smaller businesses wanting to consolidate the number of vendors they're working with? It seems like everybody's digitizing, but on the back end of that, it seems like they also want to simplify. I was just wondering how much the simplification narrative you know, is playing out when you look at some of your bigger deals that maybe have multi-products. Thanks.

Thank you for the question, Kerry. I think you hit on something at the end. It's really a two-fold answer. I'll start and let Matt go. On the front end, we deal with a lot of smaller SMBs. For many of them, we are filling in both their initial digital evolution and then also filling in what we call the digital white space, which is that area around that, that once they've taken that step and they're utilizing a core system of action, then it just makes sense to be taking more solutions that we're providing. As you go a little more upmarket, as Matt gave the example on the World Gym, the consolidation of solutions and having one provider is actually a huge advantage and one of our kind of core thesis as we continue to kind of scale both downmarket and kind of mid-market in the SMB space.

You want to add to that? Yeah. Thanks. Appreciate that. I think Eric really did hit the nail on the head. And we have seen this over the course of time in our embedded payments cross-sell. It just does not make sense for these SMBs to have multiple vendors. Certainly when they're using one of our system of action software, we have seen that in the embedded payments and the take on our embedded payment offering. And to Eric's point, The World Gym success that we had is absolutely attributable to the fact that, you know, the customer at the end of the day desired one vendor to be doing business with one partner to help them grow. And as we brought those integrated solution sets to them, they felt really confident going with us in that capacity.

Thank you all.

There are no further questions as of this time. I would now like to turn the conference back over to Eric Reamer.

Yeah, just to close, I just want to thank everyone for joining the call today. I also want to thank the entire EverCommerce team for the great quarter we had. EverCommerce is really at the leading edge of enabling the digitization of the service economy. We are extremely happy with our Q3 results, but at this time, really all of our focus and the collective energy has shifted to producing a great Q4 and really setting the stage for an outstanding 2022. Thank you guys all again for joining the call today, and we'll look forward to additional follow-ups and questions. Thanks so much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.