EverCommerce Inc.

Thank you for standing by and welcome to the EverCommerce's fiscal year 2022 third quarter earnings call. My name is Cole and I'll be your operator for today. Should you require assistance during today's presentation, please press star then zero to reach an operator. And after today's prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one. And as a reminder, this conference call is being recorded today, Thursday, November 10th, 2022. And now, I would like to turn the conference over to Brad Korch, SVP and Head of Investor Relations for EverCommerce. Please go ahead, sir.

Good afternoon, and thank you for joining. Today's call will be led by Eric Reamer, EverCommerce's Chairman and Chief Executive Officer, and Mark Thompson, EverCommerce's Chief Financial Officer. Joining them for the Q&A portion of the call is EverCommerce's President, Matt Fierstein. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended September 30th, 2022. For a link to the live or replay webcast, please visit the investor relations section of the EverCommerce website, www.evercommerce.com. The slide presentation and earnings release are also directly available on the site. Please turn to page two of our earnings call presentation while I review our safe harbor statement. Statements made on this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We are to take no obligation to publicly update or revise these forward-looking statements except as required by law. We will also refer to certain non-GAAP financial measures to provide additional information to you, our investors. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation. I will now turn the presentation over to our CEO, Eric Reamer.

Thank you, Brad. On today's call, I will highlight third quarter results and discuss key customer trends and metrics before turning the call over to Mark to dive deeper into our financials. EverCommerce remains on pace to deliver mid-double-digit growth combined with solid profitability for the full year despite increased macroeconomic headwinds, particularly affecting our marketing service solutions, which I'll discuss further in a moment. For the quarter, our reported year-over-year revenue growth was 23%. And normalizing for the effects of M&A, our pro forma revenue growth was 13% for the quarter. On an LTM basis, our year-over-year pro forma revenue growth was 18%. We continue to operate the business, balancing growth and profitability, and for the third quarter, our adjusted EBITDA and adjusted unlevered free cash flow margin were approximately steady at 19% and 14% respectively. Customer and payments growth are a key part of our business strategy. Our total payments volume, or TPV, grew 22% year over year as we continue to see increased uptake of payments processing within our core vertical system of action. Our annualized net revenue retention, or NRR, was 100% in the quarter. Finally, we're announcing today that this week our Board of Directors authorized an increased extension of our share repurchase program, doubling the amount to $100 million and extending the program through year-end 2023. As we look to where our public equity is trading, we continue to think that utilizing our excess cash flow to invest in our own business is a very creative use of capital. We continue to believe EverCommerce has a massive opportunity to drive the digitization of the service economy. which is still in the early innings and will provide us a strong tailwind to fuel growth for years to come. As a quick reminder, Epple Commerce provides vertically tailored end-to-end SaaS solutions that support highly diverse workflows and customer interactions that professionals in home services, health services, and fitness and wellness services use to automate manual processes, generate new business, and create more loyal customers. EverCommerce offers tremendous value to our customers by providing solutions tailored to the unique workflows and interactions that these various services require. At the core, we provide system of action software across many micro verticals. This is the ERP of these smaller service-based businesses and the way in which each of our customers generates new business, fulfills services, manage data operations, and engage with their customers. Our software solutions not only provide the system of actions necessary to run their daily processes, but also the marketing solutions to attract new business, the billing and payment solutions to collect effortlessly, and the customer experience solutions to create predictable and convenient experiences. Our solutions are cost-effective, easy to implement, and purpose-built for service businesses. We truly provide end-to-end solutions that our customers need to compete and grow in a marketplace that is rapidly transforming. For the past two quarters, I've talked about the diversity of our customer base across many different micro-verticals and the critical nature of our software solutions for these customers. We serve well over 600,000 paying customers across three main verticals and many sub-verticals. Our customers are focused on selling services, not goods, and many of those services are essential, even in recessionary times. Although we remain very positive about the growth prospects and resiliency of our business, we fell short of our goals in this quarter. I want to take a few moments to discuss what drove this and what we're doing about it. First, what happened in the third quarter? I noted on our second quarter earnings call that we were starting to see some pressure in our marketing service solutions, particularly lead generation. We had factored this trend into our guidance, however, these trends worsened during the third quarter. As a reminder, our marketing service solutions are approximately 23% of total revenue and are a complementary solution to our core value proposition, which is providing vertical software solutions to our service S&B customer. In the third quarter, our core vertical SaaS solutions and payment solutions continue to perform as expected, aided by the diversity of our business and essential nature of the software we provide. So what are we doing? In order to address current market conditions, our fourth quarter guidance contemplates and extends the trend I just discussed. Operationally, we are reprioritizing investment into areas that drive the most growth while also taking action to reduce costs and deliver against our goal of balanced growth and profitability. We'll begin to see the effect of our cost-saving measures in the first quarter of 2023. We won't be providing 2023 guidance until we report our fourth quarter 2022 results, but I want to comment directionally on 2023. Assuming a continuation of the macro headwind discussed in the isolated pockets of our business, we would expect 2023 revenue growth in the area of what we've currently been experiencing. Turning to slide seven, let me once again highlight our key customer and payment KPIs. We continue to focus our efforts on the land and expand nature of our selling core systems of action software to our customers and then upselling them on new features and cross-selling them on new capabilities such as payments and customer engagement solutions. We measure our cross-sell progress by looking at the growth in the number of customers that are taking more than one solution. We ended the quarter with more than 70,000 of our customers using more than one solution, a 30% increase year over year. Just over 10% of our total customer base is taking more than one solution, providing a long runway for continued growth and expansion. Embedded Payments is our most mature add-on solution. Consumers have come to expect payment for products or services to be digital, easy to use, mobile-friendly, and secure. For business owners, a seamless payments processing means higher conversion rates, better efficiency, accelerated cash receipts, and increased revenue. EverCommerce's payment solutions provide an intuitive front-end experience for consumers and is tightly embedded with our various software applications. We measure and report our total payment volume quarterly, and we ended the quarter with an annualized TPV of approximately $10.5 billion, which represents a 22% year-over-year growth. We expect TPV to grow as we continue to embed our payment solutions into our core system of action. Embedded payments is a key lever for future growth. It not only provides ample opportunity to support continual organic growth, but also provides better customer economics as customers who embed payments yield higher ARPU and improve retention. We will continue to prioritize the integration and revenue expansion of our payment and adjacent marketing and customer experience solutions across our entire solution set. I'd like to end my prepared remarks today by highlighting one solution that not only illustrates the critical nature of our software solutions, but also calls attention to how EverCommerce's software provides an essential service when it is needed most. RoofSnap, EverPro's roofing measurement estimating software solution, enables contractors to measure roofs using aerial imagery, saving time and money as these contractors build estimates or roofing projects. RoofSnap is offered as a paid subscription product that our customers view as critical to their daily workflows. RoofSnap provides a very unique service to communities when they need it most. When natural disasters strike, EverCommerce and RoofSnap partnered with AXIM and the Army Corps of Engineers to help those affected shelter in their homes. Providing roof measurements from before the disaster, RoofSnap provides the Army Corps of Engineers with measurements that they can use to apply blue tarps to affected homeowners. Once installed, these tarps allow affected families to shelter in place, freeing up services and housing for those who cannot stay in their homes. In 2021, RoofSnap provided over 24,000 measurements for disaster victims. In October 2022 alone, RoofSnap provided over 13,000 measurements for houses affected by Hurricane Ian. We are really proud of our RoofSnap team for all the great work they do. Now I'll pass it over to Mark.