EverCommerce Inc (EVCM) 2025 Q2 法說會逐字稿

Thank you for standing by. Welcome to EverCommerce's second-quarter 2025 earnings call.

My name is [Shannon]. I will be your operator for today.

(Operator Instructions) As a reminder, this conference call is being recorded today, Wednesday, August 6, 2025.

Now, I would like to turn the conference over to Brad Korch, SVP and Head of Investor Relations for EverCommerce. Please go ahead.

Good afternoon. Thank you for joining.

Today's call will be led by Eric Remer, EverCommerce's Chairman and Chief Executive Officer; and Ryan Siurek, EverCommerce's Chief Financial Officer. Joining them for the Q&A portion of the call is EverCommerce's President, Matt Feierstein; EverPro Chief Executive Officer, Josh McCarter; and EverHealth Chief Executive Officer, Evan Berlin.

This call is being webcast with a slide presentation that reviews the key financial and operating results of the three months ended June 30, 2025. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce's website, www.evercommerce.com. The slide presentation and earnings releases 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 Remer. Please continue.

Thank you, Brad. I'll begin our prepared remarks focus on our strong results and trends before turning the call over to Ryan to discuss our financial performance in more detail.

We had another strong quarter with financial results that exceeded guidance and solid progress on our key leading indicators. Our second-quarter revenue exceeded the top end of our guidance range. Revenue increased 5.3% year over year but increased 7.4% year over year on a pro forma basis, which adjust prior year for the sale of Fitness Solutions.

Adjusted EBITDA of $45 million also beat the top end of for guidance range, representing a 30.4% margin. The adjusted EBITDA margin expanded more than 230 basis points year over year.

Payments revenue, excluding Fitness solutions, grew 6.8% year over year.

Finally, I'd like to highlight that at the end of July, we re-priced and extended our credit facility, increasing financial flexibility and resulting in approximately $1.3 million in annual interest savings.

EverCommerce provides SaaS solutions for the service SMB economy. We offer tremendous value to our customers by providing system of action necessary to run their businesses with tailored, unique workflows.

We provide end-to-end solutions to more than 725,000 customers across our three major verticals: EverPro for home field services, EverHealth for physician practices, and EverWell for wellness, with the two former verticals representing 95% of 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 forma basis for the last 12 months, we generated $574.1 million in revenue, representing 7.9% year-over-year growth, with subscription and transaction revenue growing 8.1% year over year.

We generated a 30.7% adjusted EBITDA with the margin on the LTM basis.

Finally, our annualized total payment volume, or TPV, expanded to approximately $12.9 billion.

Accelerating payments adoption and utilization continues to be one of our highest priorities. In 2025, we are making specific investments in our product capabilities and go-to -market motions to prioritize payment attachments at the point of initial sale. These include product capability investments to expand addressable payments volume within our system of actions, as well as go-to-market and sales resource to catalyze incremental enablement and utilization.

At the end of the second quarter, 261,000 customers were enabled for more than one solution, reflecting a 32% year-over-year growth. This is a 400 basis points acceleration in growth rate over the prior quarters' year-over-year growth rate.

At the end of the second quarter, approximately 112,000 customers were actually utilizing more than one solution, reflecting 29% year-over-year growth. This is a 1,000 basis points acceleration in growth rate over the prior quarter's year-over-year growth rate.

Enabling customers for more than one solution is the first step in the funnel that leads to increased revenue; retention; and ultimately, profitability for these customers.

As we (inaudible) before, we began prioritizing attach at the point of initial SaaS sale and in just a few quarters, we are seeing really good results.

In the second quarter, we had record attach rates in our two flagship system-of-action softwares within our EverPro and EverHealth verticals. Once customers are enabled, the next action item is for us to facilitate usage. In the case of payment, this is (inaudible) customers to actively process on a platform. We measure this step in the funnel as utilization. Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers.

As we've illustrated in the past earnings call, the effect of more customers taking payments or other add-on features and services leads to higher net revenue retention. Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, was 97%. Year over year, our payments revenue on a pro forum basis grew over 6.8% and accounted for approximately 21% of overall revenue.

As a reminder, we report our payments revenue on a net basis and therefore, it typically contributes approximately 95% gross margin. As such, payments revenue growth is a meaningful contributor to our overall adjusted EBITDA margin expansion.

As I mentioned in my introductory comments, second-quarter estimated annual total payments volume, or TPV, was approximately $12.9 billion, representing nearly 7% year-over-year growth. Within this, we continue to see higher TPV growth in our top solutions, offset by lower growth in legacy payment products. This can be a positive mix shift over time, as our top solutions often have higher take rates.

Now, I'll pass it over to Ryan, who will review our financial results in more detail, as well as provide third-quarter and updated full-year 2025 guidance.

Thanks, Eric.

Total reported revenue in the second quarter was $148 million, up 5.3% from the prior year period. Subscription and transaction revenue, our primary recurring revenue base, was $142.8 million.

For Q2 2025, year-over-year pro forma subscription and transaction revenue growth was 7.4%. The difference between actual and pro forma revenue growth rate is to present information on a comparable basis and it is attributable to the removal of prior-year revenue associated with the sale of our Fitness Solutions that closed in 2024.

Within pro forma subscription and transaction revenue, pro forma payment revenue growth was 6.8%. The solid performance in subscription and transaction revenue was largely due to continued execution of our growth strategy to provide customers with our core system-of-action software solutions and driving expansion by promoting cross-sell and upsell opportunities leading with payments.

Adjusted gross profit in the quarter was $114.6 million, representing an adjusted gross margin of 77.4% versus 77.5% in Q2 2024, relatively flat across the comparison period.

Second-quarter adjusted EBITDA was $45 million, which is 14% growth year over year. Adjusted EBITDA margins of 30.4% compares to 28.1% in Q2 2024.

Q2 year-over-year margin expansion of over 230 basis points was partially aided by the timing of certain expenses and investments, with a portion of the favorability compared to guidance expected to be reallocated to the rest of 2025. On a year-over-year basis, margins improved due to cost optimization initiatives, mixed shift to higher margin products, and overall scale economies.

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 for the quarter, from 49.5% to 47.1%; on a year-over-year basis; and on an LTM basis, from 48.8% to 47.3%.

While the 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 improvement in customer satisfaction and acquisition, while also remaining highly focused on cost discipline in functional support areas.

Next, I'll turn 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 $27 million, improving from $23.9 million generated in Q2 2024. Levered-free cash flow was $18.9 million in the quarter. For the trailing 12-month period, we generated nearly $110.8 million in levered-free cash flow.

Due to the investments we are making in 2025, we see an impact in our levered-free cash flow, primarily due to increases in our capitalized software spend year over year, as we continue to enhance features, functionality, as well as our enterprise support model.

Adjusted unlevered-free cash flow was $34.9 million in the quarter and $143.7 million for the last 12 months, representing 16.2% and 18.8% year-over-year growth, respectively.

We ended the quarter with $151 million in cash and cash equivalents and $155 million of undrawn capacity on our revolver. As of June 30, we had $529 million of debt outstanding.

Our total net leverage, as calculated per our credit facility, was approximately 2 times and continues to demonstrate our deleveraging from strong operational performance and free cash generation.

We have [425 million] of notional swaps at a weighted average rate of 3.91% that effectively heads the floating rate component of our interest cost through October 2027.

In July, we re-priced and extended our outstanding term loan for an additional three years through July 2031 and further reduced our interest costs by 25 basis points to SOFR Plus 2.25%. In addition, we extended our $155 million revolving credit facility, which steps down in capacity to $125 million in July 2026 and continues through July 2030.

The repricing on the term loan results in interest cost savings of approximately $1.3 million on an annualized basis. The extension of the term loan and revolving credit facility provides financial flexibility.

In the second quarter, we repurchased approximately 2 million shares for $20.6 million at an average price of $10.01 per share. Based on the shares we purchased through June 30, 2025, we have approximately $51.1 million remaining in our total repurchase authorization.

I would now like to finish by discussing our outlook for the third 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 third quarter of 2025, we expect total revenue of $146.5 million to $149.5 million and adjusted EBITDA of $41 million to $43 million. For full-year 2025, we expect total revenue of $581 million to $601 million. We are increasing our guidance for adjusted EBITDA to a range of $171 million to $177 million.

Operator, we are now ready to take the first question.

Thank you.

(Operator Instructions)

Bavin Shah, Deutsche Bank.

Great. Thanks for taking my question. Congrats on the strong quarter.

Eric, maybe just for you to start off, can you just maybe give us a little state of the union on where you are in terms of your transformation initiatives and how you guys think you're progressing against that?

Yeah. We talked about the transformation optimization. Many of those are ongoing scenarios that we can continue to look for for opportunities -- specifically, optimization continues to gain more margin as we get more efficient across the organization.

The transformation perspective was really focused on really creating more energy and more focus within the (inaudible) in specific verticals, EverHealth and EverPro. Both our CEOs that we've talked to before, Evan Berlin and Josh McCarter, are both doing a phenomenal job building our organizations; building out full management teams, getting the teams closer to the end customer, which we're starting to see really positive results and efficiency and sales efficiency and marketing efficiency; and other things that we really had expected to happen. We're starting to see some of those green shoots happen, already.

That's great. Just a quick one for Ryan. Ryan, I think it's the second quarter in a row where you guys have exceeded the top end of your revenue guidance. Why not raise the rest of the year? Is there anything that you're seeing from a macro perspective or anything else we should keep in mind for the back half?

Yeah. I appreciate the question. Thanks, Bavin.

From a macro perspective, things continue to trend. Well, we've talked about how we are relatively resilient overall, in terms of the macro economy. We'll continue to track that and look at it on a regular basis.

We felt comfortable raising the EBITDA guidance really because of the confidence we have in the back half of the year but also looking at some moderation, with regards to the overperformance that we had in the first half of the year for investments and other things that we're doing -- really, to continue to generate growth and acceleration in active programs like payments or cross-sell and upsell opportunities.

On the revenue side, it's really being prudent, with regard to, like, what we see in the back half of the year compared to the first half of the year.

So at this point, we feel comfortable with both the remaining revenue guidance for the back half of the year, as well as the raise on the adjusted EBITDA guidance.

That's helpful. Thanks for taking my questions.

Kirk Materne, Evercore ISI.

Hi. This is [Dylan], on for Kirk. Thanks for taking my questions.

What are some of the embedded AI functionalities that you believe will enhance the overall customer experience of your software, going forward?

Yeah. I'll start in terms of things that we've actually done from an AI perspective. And then, I'll pass it over, actually, to Evan -- and potentially, Josh -- who will talk about some of the things that we're considering.

Over the last 18 months -- and we've talked about this -- we've launched AI-powered features across several of our product lines, including Prospect Marketing Solutions and our customer engagement -- our Customer Experience Solutions. We've launched customer survey tools within our Customer Experience Solutions.

Really, those have helped us improve prospect -- targeting for the end customer and customer engagement and actionable insights that our customers now have because of the embedded AI that we've put in those products.

AI advancement within our products is now a core part of our future product roadmaps -- really, across all of our verticals.

I'll pass it over to Evan to start in terms of some thoughts at the EverHealth level.

Yeah. thanks, Matt. I think the features we've got embedded in the roadmap for the rest of the year are features that really help our customers be more efficient -- so thinking about things in the clinical space like ambient scribe, appointment no-show predictors that help them just run a more efficient business.

And then, we have a full roadmap already built for 2026. So look for more features to be delivered across all of our core products within EverHealth.

Great. And then, can you provide us -- do you have any early thoughts on the passage of the One Big Beautiful Bill in terms of tax implications?

Yeah. I would say it's early for us, in terms of the analysis of that. It's ongoing in terms of the implication. But we do think there'll be some benefits from limitations that previously existed from interest deductibility as an example. But on an ongoing basis, we'll have more to share, I think, in the coming quarter.

Appreciate it. Thank you.

Matt Hedberg, RBC.

Great. Thanks for taking my questions. Congrats on another good quarter.

Circling back on the revenue guide, you beat expectations on the top line for, now, two straight quarters; and you maintained the full-year guide. I can appreciate there's probably some conservatism from (inaudible) in there but just make sure there's nothing else -- like, were deals pulled into the first half or anything that you like flagged for the second half? Because it feels like you're coming off of a strong first half of the year.

The first half of the year was strong. We feel good about that. We didn't pull in anything unusual, from a revenue perspective, in Q1 or Q2. We're not planning to pull anything in necessarily, from a Q3 or Q4 perspective either.

We do a bottoms-up build. We look at all the different factors within each one of the solutions. As you know, we have some top solutions that are core to our systems of action as well as (inaudible). We also have a number of other important solutions, as well.

So, it's, I would say, a relatively complex build. But we feel good about what we're setting for Q3 and Q4.

Yeah. There is some conservatism. We like to call it prudence. But we want to make sure that we're not being overly aggressive in terms of what we're publishing.

I think from our standpoint, right now, we feel like what we're guiding towards is appropriate for both Q3 and Q4.

Got it. Okay. And then, I wanted to follow up on AI as well. Last quarter, you talked not only about from a product perspective but using AI internally to just improve efficiency. I wonder if you can give a little bit of update there.

Are you seeing any improvements, whether it's in R&D with code suggestion tools or sales and marketing, customer service, any anecdotal evidence that it could be driving either more efficiencies there or perhaps even better sales outcomes?

Yeah. For sure. I'm going to focus on the customer support. I think we have talked about this in the past. But that continues to be an area where, again, still early innings with AI. So across all of our functions, we are actively leaning in an AI -forward way to find efficiencies in customer service, specifically our customer support operation within mobile solutions at EverPro.

We have deployed AI agents with our chat channel that are now resolving between 25% to 50% of all support tickets that come in, depending on which solution within that mobile mix. We've got customer stat scores that are above 85% and generating some nice significant cost avoidance from that standpoint.

That is literally just across our chat channel. We're going to add email and voice channel there. We expect that impact to grow meaningfully. So we are excited. It is still the early innings from a functional standpoint of that -- yes, from a product and engineering standpoint, from a digital marketing standpoint, from a people operations standpoint, and from a financial systems and security operations standpoint. Those are areas where we're actively testing and learning into the productivity gains and the efficiency gains from utilizing this technology, company-wide.

Great. Thanks for the color.

(Operator Instructions)

Alexander Sklar, Raymond James.

Hi, thanks for taking the question. This is [John], on for Alex.

I wanted to dig in a little bit with the customers utilizing more than one solution. We've seen a really nice step-up in the amount of customers using more than one solution in 1Q and now, again in 2Q. Do you think this upper-single-digit, low-double-digit 1,000 growth is the right cadence to think about moving forward?

And then, I have a quick follow-up.

Yeah. I'd say -- we're obviously really pleased with the progress we've made. We're obviously not going to guide to growth percentages there. I think you heard Eric talk about in his comments the areas where we've obviously continued to make investments in products and technology and go-to-market to better enable that continued multi-product take and ultimately, utilization.

Obviously, payments is more than 85% of that multi-product enablement and utilization. Also, you heard Eric talk through -- across our core growth pillars in payments from attachment to activation to wallet share expansion, again, significant execution and investment in those areas just to continue to expand the value that we can provide to our customers.

In areas like attachment, launching something like Canadian processing capabilities where some of our solutions where we didn't have them allow us to access an [unaddressable] part of the base that we hadn't before.

In areas like (inaudible) expansion, really continuing to refine payments workflows within our systems of action and increasing ways to pay. Mobile Check Capture, ACH payment, Google and Apple Pay support, these things add flexibility and also increase spend and really drive that merchant processing volume from where it was to where we believe it can be.

Again, really pleased with the progress we've made. Obviously, there is a significant runway for us to continue to drive more utilization of second, third, fourth products into the base.

As we continue to integrate more of those products into our systems of action, we expect to do just that.

Just to add to what Matt said: as we've talked about a bunch, these are the leading indicators. These are the top of the funnel. Our job is to continue to actually [downfunnel] so we can increase revenue and increase retention.

As more customers take more products, obviously, that grows revenue. The more products an individual customer takes, it significantly increases retention as well.

Okay. Thanks. Really good color there. And then, can you maybe help frame the spread between the total payment volume growth we saw this quarter and that customers using more than one solution? Is there a lag there that we should think about, as customers are unable to use more than one solution and use payments? Or is there maybe some macro factors that are causing that bit of --?

We wouldn't call it macro. I think, again, as Eric explained, it is a funnel. You start at the top of the funnel with attach -- obviously, making nice significant strides there. Utilization comes next, while a share expansion comes there. So it comes after that. There is a lag only in that you do need to take every single customer down that funnel in terms of enablement into utilization into expansion.

Secondarily -- obviously, we've talked about this in the past -- we have a pretty broad portfolio of solutions where we've integrated payments. Some of them are more mature legacy portfolios that are growing at a bit slower of a rate.

Obviously, we've again talked about our top 5 payment opportunities where we have the most significant executional approach and investments. Those are growing at a much faster rate. The [TPP] there is growing between 12% to 13% from a year-over-year perspective. Many of those are less than 10% penetrated. So the opportunity is incredibly large.

Yes. There's a lag from a funnel perspective. Again, we look to continue to grow through to some of the more mature legacy parts of the portfolio.

Okay. Thank you very much.

Aaron Kimson, Citizens.

Great. Thank you. Eric, you started this business as a payments company. Payments was 21% of revenue in the first half of this year, up from 17% full-year '24. Obviously, it is a big piece of the thesis, going forward.

Given the (inaudible) IPO in June and all the subsequent investor attention that's gone into understanding the potential of stablecoins to affect payments revenue streams, how do you think about the potential of stablecoins to affect a greater method of payment in your service-based S&B customer base over the medium and long term (inaudible)?

Well, I appreciate the question. We are, in terms of focusing on stablecoins and how it's going to affect our current payment methods -- that is not currently on the roadmap, quite honestly. We provide all -- many ways for our customers to get paid. To date, there's been, I would say, anecdotally not few requests. There's been zero requests for things of that nature.

So we will continue to be very focused on what our customers need: build products, build roadmaps, based upon making sure that they get what they need to accept payments the way they need to, in addition to being able to provide their customers what they want. So we will be responsive to the marketplace, if and when that happens.

But to date, it's not -- definitely not a short-term roadmap. I wouldn't even say midterm. Clearly, that can shift if the market sentiment shifts. But, right now, that's not a core focus.

Got it. That's really helpful. And then, Ryan, can you talk about the improved visibility you have into the business as a result of the [Mar Tech] discontinuation and eventual divestiture when giving us guidance now' and maybe also what needs to go right to potentially accelerate back to a double-digit grower in the --?

Thanks. Yeah. I appreciate the question, Aaron.

Really, from a visibility perspective, I would say, for the most part, what we've taken out from a continuing operations perspective is variabilities to seasonality. So it's much more linear. I think, overall, there is very little seasonality when you take out Mar Tech from the overall business.

I would say that, like, it just continues to refocus essentially where everybody is spending their time and effort, which is within EverPro and EverHealth and EverWell, at this point in time.

We continue with the process on the Mar Tech side. We will continue with the optimization efforts that we have.

I think you can see that coming through from our operating expenses as a percentage of revenue, overall. If you look at the LTM on a basis of year-over-year analysis, we're going to continue to -- as we talked about it earlier, we have the transformation efforts, we have the optimization efforts.

On the optimization piece, we intend to actually take costs out on an optimized basis, whether it's through AI or otherwise, in order to make the continued investments for revenue expansion that we want to make, going forward.

Thank you. I'm currently showing no further questions at this time.

I would now like to hand the call back over to Eric Remer for closing remarks.

Well, thanks for that. Well, thank you, guys, for joining us today.

Not only do we beat our headline expectations, we're also showing real positive momentum in our leading indicators. This is exactly what we set out to do.

I look forward to sharing our continued success in the coming quarters. Thanks, again.

This concludes today's conference call. Thank you for your participation. You may now disconnect.