EverCommerce Inc.

Thank you for standing by and welcome to EverCommerce's first quarter 2025's Earning Call. My name is Corey Albeer, operator today. At this time, all participants are in a 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 1-1 on your telephone and you will hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. As a reminder, this conference call is being recorded today, Thursday, May 8th of 2025. I would now like to turn the conference call over to Brad Korsch, SVP and head investor of relations for EverCommerce. Please go ahead.

Good afternoon and thank you for joining. Today's call will be led by Eric Reamer, EverCommerce's chairman, chief executive officer, and Ryan Surick, EverCommerce's chief financial officer. Joining them for the Q&A portion of the call are EverCommerce's president, Matt Feierstein, EverPro's chief executive officer, Josh McCarter, and EverHealth's chief executive officer, Evan Berlin. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended March 31st, 2025. For a link to the live or replay webcast, please visit the investor relations section of the EverCommerce website, .evercommerce.com. The slide presentation and earnings release are also directly available on the site. Please turn to page 2 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 undertake 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 in our comments today. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and on our earnings call presentation. As a quick reminder, following our announcement in March that we are seeking strategic alternatives for the marketing technology solutions, we have classified marketing technology as discontinued operations. Our commentary today will focus on the continuing operations of our business focused on our Everhealth, Everpro, and Everwell verticals. All financial and operating metric results are presented related to the continuing operations only unless otherwise specified. I will now turn it over to our CEO, Eric Rehmer. Please continue.

Thank you, Brad. I will focus my commentary on first quarter 2025 results as well as our top strategic priorities. Brian will then discuss our financial performance in more detail. Our first quarter reporting revenue exceeds the top end of our guidance range. For the first three months of the year, GAAP revenue increased .2% -over-year. At a pro-former basis, which adjusts for the prior year's solid fitness solutions, revenue increased .4% -over-year. Adjusting to $44.9 million also be at the top end of our guidance range, representing a .6% margin. Adjusting with the margin expanded nearly 360 basis points -over-year. Payments revenue excluding the fitness solutions grew .4% -over-year, driven by nearly 9% growth in TPB. Finally, our board of directors approved a $50 million increase to our share repurchase program, while also extending this authorization to year-end 2026. Evercommerce provides SaaS solutions for the service system economy. We offer tremendous value to our customers by providing the system of action necessary to run their businesses with tailored unique workflows. Adjusted to account the planned sales and marketing technology solutions, we provide -to-end solutions to more than 725,000 customers across the three major verticals. EverPro for home field services, EverHealth for physician practices, and EverWell for wellness, with the two former verticals representing 95% consolidated revenue. Our large base of customers represents an immense embedded opportunity to provide value added features and services like payments and customer rebates through our purchasing programs. On a pro-former basis, for the last 12 months we generated $563.9 billion in revenue, representing .8% -over-year growth. Subscription and transaction revenue grew .1% -over-year. Over the last 12 months, we generated .1% adjusted EBITDA margin. Finally, our annualized total payment volume, or TPB, expanded to over $12.7 billion. Before I dive into our normal course discussion of customer trends, I wanted to update you on our AI initiatives at Evercommerce. AI is an important part of our forward strategy for multiple reasons. First, embedding AI capabilities into our customer-facing software allows us to innovate faster and maintain a leading competitive position. Second, using AI for development work enables us to more efficiently and more quickly bring new features, functions, and solutions to market. And third, we believe that using AI-driven workflows internally will be a key driver to continue our cost discipline and drive additional long-term margin expansion. Over the past 6 to 12 months, we have made significant progress integrating AI in our products and our internal workflows. We have deployed third-party AI platform features and automation tools across talent acquisition, people operations, employee development functions to reduce manual workloads, improve data collection, and create impactful, actionable insights. Looking ahead, we expect additional AI use cases to have a meaningful contribution to our products and operations. Before discussing our customer metrics, I want to once again remind you that these metrics have been restated for both the current and year-ago periods to exclude marketing technology solutions. Accelerating payments adoption and utilization continues to be our highest priority, and in 2025, we're making specific investments in our product capabilities and -to-market motions to prioritize payment attachments at the point of initial sales. At the end of the first quarter, 244,000 customers were enabled for more than one solution, reflecting 28% -over-year growth. As we discussed when we introduced this metric, enabling customers for more than one solution is the first step in the funnel that leads to increased revenue, retention, and ultimate profitability of these customers. Once customers are enabled, the next action item for us is to facilitate usage. In the case of payments, this is getting our customers to actively process on our platform. We measure this step in the funnel as utilization. At the end of the first quarter, approximately 99,000 customers were actively utilizing more than one solution, reflecting 20% -over-year growth. Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers. As we've illustrated past earnings calls, the effect of more customers taking payments or other add-on features and services is higher net revenue retention. Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, was 97%. -over-year, our payments revenue on a pro-former basis grew over 8% and accounted for approximately 21% of overall revenue. As a reminder, we report our payments revenue on a net basis and therefore contributes to approximately 95% gross margin. Payments revenue is a meaningful contributor to overall adjusted e-bid margin expansion. First quarter estimated annualized total payment volume, or TPV, was approximately $12.7 billion, representing nearly 9% -over-year growth. As I mentioned earlier, we are making strategic, high ROI investments into our payments platform and team, which we believe will result in increased payment adoption, TPV growth, and revenue acceleration. Now I will pass it over to Ryan, who will review our financial results in more detail, as well as provide our second quarter guidance.

Thanks, Eric. While total reported revenue in the first quarter was $142.3 million, subscription and transaction revenue, our primary revenue base, was $137.8 million, up .3% from the prior year period. For Q1 2025, -over-year pro-former revenue growth was 7.4%, while -over-year pro-former subscription and transaction revenue growth was 7.6%. The primary difference between the actual and pro-former revenue growth is attributable to the removal of prior year revenue associated with the sale of our fitness solutions that closed in 2024. The solid performance in subscription and transaction revenue was largely due to continued execution of our growth strategy to provide customers our core system of action software solutions and driving expansion by promoting cross-sell and up-sell opportunities leading with payments. As Eric noted, we also exceeded the top end of our adjusted EBITDA guidance range. First quarter adjusted EBITDA was $44.9 million, representing a .6% margin versus 28% in the Q1 2024, which is .3% growth -over-year. Q1 margin expansion of over 360 basis points was aided by the timing of certain expenses investments, with a significant portion of the favorability compared to guidance expected to be reallocated to later periods within the year. On a -over-year basis, margins improved due to cost optimization initiatives, mixed shift to higher margin products, and overall scale economies. Adjusted gross profit in the quarter was $111.1 million, representing an adjusted gross margin of .1% versus .1% in Q1 2024. Adjusted gross profit improved largely as a result of a positive mixed shift in the business to high margin revenue streams, such as payments and rebates. Now, turning to adjusted operating expenses, which are reconciled in the appendix to this presentation, overall adjusted operating expenses improved as a percentage of revenue, both per the quarter from .1% to .5% on a -over-year basis and on an LTM basis from .2% to 47.9%. While the previously mentioned timing of investments and expenses was a factor, the long-term trend of continued operating expense moderation is deliberate and attributable to both growth of the business and specific actions taken as part of our transformation and optimization program. We maintain our focus on improving the customer satisfaction and acquisition, while also highly focused on cost discipline in functional support areas. Now, turning to some key liquidity measures, which include cash flow from continuing and discontinued operations, we continue to generate significant free cash flow as we invest to grow our business. Cash flow from operations for the quarter was $30.7 million, more than double the $13.3 million generated in Q1 2024. Levered free cash flow was $25.1 million in the quarter, and for the trailing 12-month period, we generated more than $110.9 million in levered free cash flow. Adjusted unlevered free cash flow was $34.3 million in the quarter and $138.9 million for the last 12 months, representing .8% and .7% -over-year growth respectively. We ended the quarter with $148 million in cash and cash equivalents, and we maintain $190 million of undrawn capacity on our revolver. We have $531 million of debt outstanding as of the end of the quarter, which matures in July 2028. Our total net leverage, as calculated for our credit facility, at the end of the quarter, was approximately 2.1 times, consistent with our financial policy. We have $425 million of notional swaps at a weighted average rate of .91% for the floating rate component of our interest cost. Owing in large part to our strong balance sheet, cash flow generation, and liquidity profile, our Board of Directors once again increased our share repurchase authorization by another $50 million and extended the program, which was set to expire at the end of this year, to year-end 2026. In the first quarter, we repurchased approximately 1.1 million shares for $11.2 million at an average price of $10.08 per share. Based on the recently increased authorization and shares repurchased through March 31, 2025, we have approximately $71.6 million remaining in our total repurchase authorization. I would now like to finish by discussing our outlook for the second quarter and full year of 2025. As a reminder, our guidance for revenue and adjusted EBITDA for 2025 is based on our continued operations, which excludes marketing technology solutions. For the second quarter of 2025, we expect total revenue of 144.5 to 147.5 million and adjusted EBITDA of 39.5 to 41.5 million. For full year 2025, we expect total revenue of 581 to 601 million and adjusted EBITDA of 167.5 to 175.5 million, unchanged from the guidance provided in mid-March. Operator, we are now ready to take the first question.

Thank you very much. As a reminder, at this time we will conduct the question and answer session. Please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile our Q&A roster. Our first question comes from Kirk Mantering of Evercore ISI. Your line is open.

Hi, this is Phil on for Kirk and thanks for taking my question. Last quarter, prioritizing payment attachment at the point of sale versus future add-on sales motion was mentioned as part of your strategy. How has this been playing out for your sales teams in terms of win rates?

Yeah, I appreciate the question. Super excited about that. Again, I think that's still a core focus, a core strategy for us. In Q1, we absolutely saw some benefits of that, saw increases in that payment attachment with new customers. And there's nuance to that as well. We're also doing things like, again, integrating that payments, that selling motion of payments into the SaaS workflow. But also we're doing sell-behind efforts. So when a sale goes unclosed with a closed loss reason or it's just unclosed, we have our payments team falling behind. So again, a lot of focus on payments attached at the time of software sale. That is through that integrated motion. But we're also investing in additional -to-market optimization motions around that as well. And that's definitely proven fruit for us in Q1.

Okay, great. And then outside of payments integrations, what do you view as the biggest upsell opportunities within your portfolio of EverPro, EverHealth, and EverWell?

Yeah, I'll start. And certainly, you know, if Evan and Josh want to chime in from each of their vertical perspectives, obviously, you know, super focused on payments from that penetration execution. It is our largest opportunity. But we're really excited about additional product integrations into our core systems of actions. A couple of examples, some of which we've spoken about in the past, obviously, EverPro Edge has been a big opportunity from a growth perspective over the last year. But additional products that we have from a customer experience solution standpoint. So reviews integrations at systems of actions like Joyston Service Fusion also create real opportunities for us to expand the perimeter of our existing systems of actions with additional product capabilities. Evan, would you add anything from the EverHealth side?

Yes, good question, Bill. I just say we talked about it in past quarters from an EverHealth perspective that beyond payments, we're working to move beyond cross-sell and really working on delivering more value in the packages that we're selling to customers. Just given the integrated capabilities we've got with an EverHealth. So not just selling practice management and the EMR solution, but integrated patient engagement, RCM, our insurance clearinghouse, in addition to the kind of payments upsell. So the answer in EverHealth is really around a more integrated package that our small practices can purchase from us. And then certainly as they grow and scale, you know, buy more features over a period of time.

Great. Thanks for taking my question. Operator, next question. Operator, can you hear us? Yes, Alex, your line is open.

Great, thank you. Eric or Matt, just in terms of macro, you served some resilient end markets and talked about this in the past, but any change in pipeline activity or some of the net expansion metrics you're tracking over the last two months tied to macro or any tariff concerns?

Yeah, thanks for the question. You know, we obviously are monitoring it daily with the volatility in the macroeconomic environment, but to date we are not seeing any degradation in any of our kind of key metrics we follow from Legion to, you know, throughout the funnel, onboarding, so on and so forth. So we'll continue to monitor it, but to date it's kind of business as usual.

Maybe just a quick follow up on that for Ryan. Anything different embedded in the outlook for potential different changes in demand environment tied to that macro?

Now when we looked at the full year and we updated guidance for Q2, but left the full year unchanged, we're not making any particular assumption differently with regard to kind of the macroeconomic environment and, you know, things that are in the news currently. Should that change? We obviously would make things updated. We just continue to be prudent in the guidance that we're giving overall. We feel good about the Q1 results, but as I said, we had some expense favorability that we think we're going to continue to move forward into the rest of the year, and nothing therefore changes for the full year guidance perspective. And just to

add on the premise of your question, we do agree we have really good end markets that are resilient. We're not immune to massive macro changes that could occur, and so that's why, as Ryan said, and I said earlier, we're just going to track it closely and make sure that we're doing what we need to do quarterly internally.

Okay, and then maybe just one other follow-up for me, similar to the first question, but the multi-product adoption, I think, was a record sequential growth. And is there anything we can read into that in terms of TPB or payments growth kind of accelerating here next quarter or the rest of the year, or is there a good cross-sell of kind of other solutions outside of payments? Thanks.

Yeah, I'll start, and I'll certainly let Josh add. Again, we're excited and remain excited about the opportunity and the progress that we continue to make across payments, although, again, lots of field in front of us to continue to drive execution and growth. I think, again, enablement, as Eric said, is the first step in the process. So, you know, excited for the continued and really solid quarter from a payment attach standpoint. The next step in the funnel is obviously utilization, and we're incredibly focused on the -to-market optimization that we're doing, the product enhancements that we're doing. And again, we need to continue to drive SaaS workflow improvements, add to the payment features that we have, and integrate customer success. So those are all things that we're actively investing in and all things that we believe as we have a greater foundation of enabled customers for payments that we believe that that's going to turn itself into more utilization and ultimately more TPB. And I did speak to some of the other products that we have. I mean, we're also excited about that. I didn't mention additional homeowner financing and consumer lending products that we've integrated in, as well as, like I mentioned, Everpro Edge and further integration of our reviews products across our Everpro portfolio. Sorry. Josh, anything you would add there?

I think you hit most of it. The only other two things I would say is that as we're adding and improving the product and adding more ways to pay, that will enable us to capture more TPB. So if we're adding cap to pay and more mobile payments and ACH and check capture and so forth, that definitely grows the pie. And then the other point on the product that you brought up, something like Edge or the reviews, that's also a retention aspect because the more products that a customer buys from us, that's going to retain them longer and produce a longer lifetime value for us. So those are two other things I'd highlight. All right, great. Super thorough. Thank you all.

Thank you very much. As a reminder, to ask a question, please press star 1 1 on your phone and you will be loaded into the queue. Stand by for our next question. Our next question comes from Aaron Kimson of Citizens. Aaron, your line is open.

Great. Thanks for the question, guys. I'm sorry if some of this came up. I've been jumping around calls, but when we think about your 500,000 customers or so in the US, is it safe to assume that most of the potential tariff exposure there's on the ever pro side of the business? And do you have any thoughts on what percentage of revenue could be exposed to tariffs?

Again, most of our ever pro business is break fix. So we're not in kind of new starts and major construction. So we're, you know, we don't think from a macro perspective, our customers are going to be directly hit by, you know, our specific ever pro customers are going to be directly hit by that. Will some of their supplies potentially and that those costs would pass on to the customer? Will customers if the macroeconomics gets worse, pull back on fixing, you know, non critical things potentially. So we're aware of all the, you know, all the potential pitfalls that could happen with regard to it. But we're not directly exposed in terms of, you know, tariffs hitting our business having a direct impact on our customers.

Got it. And then secondly, for Josh, maybe you've had about six months now to wrap your arms around the ever pro business. Any pleasant surprises or particular areas of improvement you've identified so far? And I know you joined my mind body right around the take private since investors know that from its public days. Are there any lessons from my body you think will prove particularly relevant running after play? Yeah,

so thank you for the question. First of all, last six months have been fantastic and I continue to find more opportunity in the business, which has been great. And several of the areas we talked about payments and I think that we all see that as one of the learning programs across ever commerce and specifically within ever pro. Outside of that, we have a lot of opportunity to cross all other products and start building out more features and functions within CES within marketing products. And then also thinking about other verticals that our solutions can support. We also have another product that is called Service Nation, which is a training trade show and rebate program that I think we just barely scratched the surface on. Right now we have several thousand participants in that program and I think that could grow significantly. So as we look at rebates, you heard about edge before a lot of those type of programs can bring more people into the fold, whether they're on those programs or on other systems of action. So I'm very optimistic and very positive about about the opportunity that we're proud of. And then the question about mind body, a lot of the work that we did there was transformational work and you've heard about the transform and optimize initiatives that we have going across ever commerce. And I think a lot of the things that we did in terms of restructuring the sales organization and consolidating down from multiple organizations into one streamlining different processes, consolidating down systems, streamlining recording, launching a revenue operations function. All of those type of things that we did at mind body are very applicable to ever grow. And we've also built out a great executive team that has experience in these type of transformation that's really helped us drive those initiatives forward.

Great. Thank

you guys. Thank you very much. At this time, I'm showing no further questions and I would like to turn it back to Eric Griemer for closing remarks.

Thank you again for joining us today. While we are pleased with the results this quarter, we are much more excited about the trajectory of the business and successes we're seeing on our transformation journey. We look forward to sharing even more with you in the weeks and

months ahead. Thanks again. Thank you very much for your participation in

today's conference. This does conclude the program. You may now disconnect.