EverCommerce Inc (EVCM) Q4 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic Shifts

• Fourth Quarter Revenue: $175 million, up 3.3% year over year.
• Pro Forma Revenue Growth: 7% year over year.
• Adjusted EBITDA: $50.4 million, representing a 28.8% margin.
• Adjusted EBITDA Margin Expansion: 340 basis points year over year.
• Payments Revenue Growth: 8.9% year over year.
• Annual Total Payment Volume (TPV): $12.6 billion, 9% year-over-year growth.
• Subscription and Transaction Revenue: $139 million, up 4.2% year over year.
• Marketing Technology Solutions Revenue: $29.6 million, down 1.6% year over year.
• Adjusted Gross Margin: 70.9%, up from 67.3% in Q4 2023.
• Cash Flow from Operations: $48.4 million, compared to $36 million in Q4 2023.
• Levered Free Cash Flow: $43.8 million for the quarter.
• Cash and Cash Equivalents: $136 million at the end of the quarter.
• Total Debt: $532 million, maturing in July 2028.
• Net Leverage Ratio: Approximately 2.2 times.
• Share Repurchase: 623,000 shares for $7 million at an average price of $10.88 per share.
• First Quarter 2025 Revenue Guidance: $138 million to $141 million.
• First Quarter 2025 Adjusted EBITDA Guidance: $39 million to $41 million.
• Full Year 2025 Revenue Guidance: $581 million to $601 million.
• Full Year 2025 Adjusted EBITDA Guidance: $167.5 million to $175.5 million.

• Warning! GuruFocus has detected 4 Warning Signs with EVCM.

Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EverCommerce Inc (NASDAQ:EVCM) ended 2024 on a strong note, with fourth-quarter reported revenue exceeding the top end of their guidance range.
• GAAP revenue increased by 3.3% year over year, and on a pro forma basis, revenue increased by 7% year over year.
• Adjusted EBITDA of $50.4 million beat the top end of guidance, representing a 28.8% margin, with a margin expansion of nearly 340 basis points year over year.
• The company grew its customer count by more than 7% over the past year, serving over 740,000 customers across its major verticals.
• Payments revenue, excluding fitness solutions, grew 8.9% year over year, driven by 9% growth in total payment volume (TPV).

Negative Points

• Marketing Technology Solutions revenue decreased by 1.6% from the prior year period.
• The company is actively seeking strategic alternatives for its marketing technology solutions, indicating potential instability or lack of focus in this area.
• Despite the growth in customer count, the annualized net revenue retention (NRR) for core software and payment solutions remained at 96%, consistent with the prior quarter, suggesting limited improvement in customer retention.
• The company faces challenges in increasing payments adoption due to inertia of change among SMBs.
• Adjusted operating expenses modestly increased as a percentage of revenue, indicating potential cost management issues.

Q & A Highlights

Q: Can you provide an update on the macroeconomic impact on your customers, particularly regarding tariffs or hesitancy due to a new administration? A: Matthew Feierstein, President, stated that there are currently no discernible impacts on acquisition, utilization, or churn trends due to macroeconomic factors. They monitor indicators like cost per lead and sales cycle times closely. Eric Remer, CEO, added that their main verticals, home field services and health services, remain consistent regardless of macroeconomic changes.

Q: Could you elaborate on your strategy for augmenting go-to-market efforts with partnerships and channel optimization? A: Ryan Siurek, Chief Accounting Officer, explained that partnerships are a key component of their customer acquisition strategy, alongside digital efforts and trade shows. Evan Berlin, CEO of EverHealth, noted that they see double-digit growth in channel distribution through partnerships, which helps diversify acquisition channels and reduce costs.

Q: What factors contributed to the acceleration in customer growth to over 7% in 2024? A: Matthew Feierstein, President, attributed the growth to consistent new customer acquisition driven by digital efforts and partnerships. Retention rates were as expected, supported by ongoing product investments. Eric Remer, CEO, emphasized the importance of their large customer base of 740,000 SMBs, which provides opportunities for cross-selling and upselling.

Q: Post-marketing solutions sale, how do you plan to enable more horizontal optionality for your customers? A: Eric Remer, CEO, stated that while they initially entered the marketing space to meet customer needs, they have seen the most success with embedded finance, particularly payments. They plan to focus on creating the best SaaS products and integrated finance solutions, while partnerships will provide additional value where needed.

Q: How should we view the guidance philosophy under the new CFO, and what are the growth levers for the second half of the year? A: Ryan Siurek, Chief Accounting Officer, explained that the guidance is based on a 50-50 view of the business, considering historical trends and market conditions. They aim to provide prudent guidance that they are confident in exceeding, as demonstrated by their performance in 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.