EngageSmart, Inc.

Hello everyone and welcome to the Engage Smart Q3 2021 earnings call. My name is Daisy and I'll be the operator for today's call. You will have the opportunity to register a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Josh Schmidt from Engage Smart to begin. So Josh, please go ahead.

Thank you and good afternoon. With me on today's call are Bob Bennett, Chief Executive Officer, and Cassandra Hudson, Chief Financial Officer. Our third quarter 2021 earnings press release and supplemental presentation in associated form 8K can be found at investors.engagesmart.com. During this call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. We also will be discussing certain non-GAAP financial measures. please refer to the risk factors section of our quarterly report on Form 10Q and other SEC filings for more information on the risks regarding these forward-looking statements and risk factors associated with our business. A reconciliation of non-GAAP metrics to the nearest GAAP metric can be found in our earnings press release and supplemental presentation, both of which are available on the investor relations section of our website. This call is being webcast live and will be available for replay on our website at investors.engagesmart.com.

I would now like to turn the call over to Bob Bennett. Welcome everyone and thank you for joining us. In this, our first quarter as a public company, I feel compelled to point out the source of the success we have achieved today. Delivering on our mission of simplifying customer and client engagement can be directly attributed to the success of our customers, partners, and our employees. And I am truly humbled by their contributions. Before we jump into our third quarter results, I thought I'd provide a little background on EngageSmart's position in our markets. We founded EngageSmart because activities like paying bills, going paperless, and scheduling appointments shouldn't be that hard. So we set out to create easy to use digital self-service software that simplifies customer and client interactions. Our growth in customer count and revenue is an indication of the strong market reception for our vision. Customers are increasingly adopting our vertically tailored customer engagement software and integrated payments capabilities to simplify engagement with their clients by driving digital adoption and self-service. EngageSmart addresses a target market size at $28 billion, encompassing small, medium, and enterprise-sized businesses. We serve these organizations and their customers with modern customer engagement and electronic payment software tailored to the verticals of wellness, government, utilities, financial services, healthcare, and giving. These markets are huge and underpenetrated with strong non-cyclical growth dynamics. They are mired with legacy systems and manual process. they represent an exciting and large white space of prospects with growing demand and need for our modern software and payment solutions we group our solutions into two segments with similar annualized revenue of more than 100 million in each those segments are small and mid-sized businesses which we refer to as smb and larger organizations which we refer to as enterprise The SMB segment is represented by our simple practice solution and some adjacencies. The enterprise segment is anchored by our invoice cloud solution and also comprises the vertical solutions of Health Pay 24 for enterprise healthcare and donor drive for giving. Most of our SMB segment revenue is subscription-based, while our enterprise segment is primarily transaction-based revenue. In the SMB segment, our go-to-market strategy is powered by performance marketing programs and end-user influencers communicating that our software helps efficiently manage customer-facing and back-office workstreams such as scheduling, billing, notes, compliance, and collections. Importantly, our go-to-market is also powered by prospects themselves as they visit our website via trusted word-of-mouth recommendations from peers. We have approximately 120,000 clinicians now using the simple practice solution. In the enterprise business, where we have more than 3,000 customers simplifying consumer engagement through us, direct sales, partnerships, and systems integrations are important components of our selling motion. They accelerate new customer acquisition and increase long-term customer retention. With that as an overview of our business, I'd like to turn now to the third quarter. EngageSmart delivered record revenue coming in at $55.5 million. We had rock-solid performance in both segments of our business, highlighted by more than 60% revenue growth in our SMB segment and more than 25% revenue growth in our enterprise segment. Beginning with the SMB segment, Simple Practice continued to deliver high transaction volume, fast growth in subscription revenue, and high net client additions from conversions of free trials for its practice management solution, offered at www.simplepractice.com. Simple Practice, which has its roots in behavioral health, now serves speech-language pathologists, occupational therapists, nutritionists, chiropractors, and physical therapists, among others. These new markets are high growth engines for our SMB segment. As a true SaaS solution, SimplePractice continually advances the solution. In Q3, those advances including enhanced telehealth functions, embedded signatures for clients, and enhanced easy to view income tracking. As of this quarter, SimplePractice is in 10 wellness specialties and has a solid product roadmap to fuel growth. We are setting the standard for simplified digital engagement for clinicians across the wellness spectrum and their patients. In enterprise, Invoice Cloud showed continued strength in selling and product leadership in the quarter. We signed two strategic enterprise-level alliances. One was with an SAP integrator, and one was with an Oracle Systems integrator. These alliances helped to drive growth by referring their existing clients and accelerating the implementations of all our enterprise solutions. We also strengthened our longstanding partnership with Harris Utility Group and are now their preferred electronic bill presentment and payment partner. Additionally, we had a notable new customer launch at National Fuel, integrating with its SAP environment to help their customers use preferred methods for bill pay, such as pay-by-text, pay by phone, pay online, and the ability to use digital banking services such as PayPal. Such new launches further drive our monthly recurring revenue with transaction revenue generation beginning day one. continuing with the enterprise segment donor drive is playing an increasingly impromptu role the giving marketplace has seen a dramatic shift from in-person peer-to-peer fundraising events to virtual events and our highly effective virtual event and charity streaming software has enabled our non-profit and corporate giving customers to exceed expectations in this difficult environment Nonprofits such as National Multiple Sclerosis Society and the Make-A-Wish Foundation receive immediate value from our donor drive mobile-friendly solution. Looking forward, the market for our customer engagement and online bill pay software remains vast. According to the 2020 State of Online Payment Survey conducted by InvoiceCloud, more than 80% of bill payers prefer to pay their bills online, on mobile, on text, or via phone if given the option. And organizations are increasingly becoming aware that providing customers with multiple ways to pay has proven to reduce late or lost payments and to increase customer satisfaction overall. We see our success as rooted in five key strategic growth drivers which form our flywheel. Superior talent that we acquire through recruitment, develop, and retain, and that talent brings vertical expertise to provide deep industry-specific domain knowledge and drive a strong customer focus to help direct our roadmaps and maintain product leadership in each of our verticals with highly efficient go-to-market strategies to drive strong organic growth. And these strategic drivers are deployed across all of our solutions. Talent is where it all begins, and driving growth is in our DNA. With that, I'd like to turn the call over to our CFO, Cassandra Hudson. Cassandra?