Q4 2024 EverCommerce Inc Earnings Call

Eric Remer

Thank you, Brad. On today’s call, I will highlight fourth quarter 2024 results as well as provide an update on our top priorities within our key verticals for 2025. After my remarks, Ryan will take over and dive deeper into our financial performance. We ended 2024 on a strong note. Our fourth quarter reported revenue exceeded the top end of our guidance range.
In fact, throughout 2024, we consistently met or beat expectations. For the fourth quarter, GAAP revenue increased 3.3% year over year. And on a pro forma basis, which adjusts prior year for the sale of the fitness solutions, revenue increased 7% year over year. Adjusted EBITDA of $50.4 million also beat the top end of our guidance range, representing a 28.8% margin. Adjusted EBITDA margin expanded nearly 340 basis points year over year.
Payments revenue, excluding the fitness solutions, grew 8.9% year over year, driven by 9% growth in TPV. Finally, with last quarter’s announcement of Josh McCarter joined as CEO of EverPro and more recently, our announcement that Evan Berlin, our prior Chief Operating Officer, has transitioned to the EverHealth CEO role, we have made significant progress in our transformation efforts that are key to achieving our growth acceleration goals.
With the establishment of these leaders, the sale of our fitness solution in 2024 and our recent announcement regarding our intent to sell marketing technology solutions, we are positioning our future growth as a pure-play SaaS and embedded payments platform, empowering critical service providers in the SMB space. EverCommerce provides SaaS solutions for the service SMB economy. We offer tremendous value to our customers by providing the system of action necessary to run their businesses with tailored unique workflows.
As you know, we only update our customer count once per year, and I am now happy to report that we grew our customer count by more than 7% over the past year. We provide end-to-end solutions to more than 740,000 customers across our three major verticals.
Our large base of customers is a key strength of EverCommerce. Each one of those customers represent an opportunity to utilize embedded payments, add more features and/or users and upsell to more robust products as the business grows. We talked often about our transformation optimization program’s financial benefits, whether it’s cost savings or accelerated growth.
But another key outcome of this program is enhancing our ability to provide more value to our large base of customers. On a pro forma basis, in 2024, we generated $690.7 million of revenue, representing a 5.7% year over year growth. Subscription and transaction revenue grew 8.4% year over year.
For the full year, we generated 25.3% adjusted EBITDA margin, which is approximately 230 basis points of margin expansion year over year. Finally, our annualized total payment volume or TPV expanded to over $12.6 billion.
As Brad highlighted in his opening remarks, we recently announced that we were exploring strategic alternatives to our marketing technology solutions. These solutions are valuable products to our customers, fueled by the fact that service-based small businesses need various digital channels to promote their businesses and acquire customers.
What has become clear to us as we’ve been on a transformation optimization journey, however, is that our primary focus, energy and investments need to be providing best-in-class vertical SaaS software with embedded payments. We believe that focusing on these areas will allow us to maximize long-term growth, margin accretion and ultimately, shareholder value.
From a more practical standpoint, we believe that removing this campaign-based revenue stream and lower-margin business will help highlight the higher growth, higher gross margin businesses from our core SaaS and payments businesses.
Post the planned sale of the Marketing Technology business, our core verticals will be EverPro for Home Services, EverHealth for Health Services and EverWell for Wellness, with the two former verticals representing approximately 95% of consolidated revenue.
EverPro is an industry-leading provider of integrated workflow-driven solutions for the SMB field service professionals, providing end-to-end management from lead management, scheduling and dispatch, estimating, invoicing and value-added solutions such as payments and customer experience management.
EverPro faces a fragmented and largely unaddressed market. While there are competitors in our space, our growth opportunity in EverPro largely stems from attracting customers who are not using integrated solutions and from increasing payments adoption. Our 2025 priorities with EverPro are to focus on growing our base of customers and improving the expansion and cross-sell opportunities inherent in the business.
Most importantly, the adoption of payments. We plan to augment our go-to-market approach, including scaling our efforts and partnerships and channel optimization. Additionally, we are streamlining product and development and engineering by unifying road maps, rationalizing platforms and leveraging AI to continue to provide market-leading products to our customers.
While we have publicly announced Josh’s arrival to lead EverPro, we’ve also augmented leadership team with the hiring of proven successful leaders across sales, marketing, product and technology. We have broken down the fragmented solution-centric organization structure within EverPro and built a strong functional organization that we believe will improve efficiency, enable faster decisions, and accelerate growth.
EverHealth is a leading provider of end-to-end capabilities for small physician practice from scheduling to practice management to patient engagement to revenue cycle management that our health care customers need. The [capstone] appointment at EverHealth was our announcement in January that Evan Berlin will be taking the reins as the new CEO.
We are investing in our products to provide enhanced features, AI-driven workflows and deeper integration to create more value for our customers that we believe will provide better customer acquisition and higher retention. Our platform enables providers to select a single partner of choice to support their entire operation. While we lead with SaaS to empower our customers, accelerating payments continues to be a high priority for EverCommerce.
Not only have we made good progress throughout 2024, but the real-time investments we’re making today are geared toward increased enablement and usage. As I mentioned last quarter, we are specifically investing in our product capabilities and go-to-market motions to prioritize payment attachment at the point of initial SaaS sale as opposed to a separate add-on sales motion.
At the end of the fourth quarter, approximately 219,000 customers were enabled to more than one solution, reflecting a 22% year-over-year growth. As we discussed when we introduced this metric, enabling customers to more than one solution is the first step in the funnel that leads to increased revenue, retention and ultimately 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 fourth quarter, approximately 91,000 customers were actively utilizing more than one solution, reflecting more than a 14% year-over-year growth, an acceleration over the year-over-year growth reported in the prior quarter.
Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers. As we have illustrated in the past earnings calls, the effect of more customers taking payments and 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 for the core software and payment solutions was 96%, consistent with the prior quarter. Year over year, our payments revenue on a pro forma basis grew 9%, accounting for approximately 17% of overall revenue.
This is an acceleration in growth versus last quarter, and it speaks to the continued progress we’re making in payments adoption. We report our payments revenue on a net basis. And as a result, payments revenue contributes approximately 95% gross margin and is a meaningful contributor to our overall adjusted EBITDA margin.
Fourth quarter estimated annual total payments volume, or TPV, was approximately $12.6 billion, representing a 9% year-over-year growth. As I mentioned earlier, we’re making strategic high ROI investments into our payments platform and team, which we believe will result in increased payments 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 first quarter and full year 2025 guidance.

Ryan Siurek

Thanks, Eric. The total reported revenue in the fourth quarter was $175 million, up 3.3% from the prior year period. Within total reported revenue, subscription and transaction revenue was $139 million, up 4.2% from the prior year period and Marketing Technology Solutions revenue was $29.6 million, down 1.6% from the prior year period.
The amounts presented on this slide for marketing technology revenue include amounts historically presented as marketing technology solutions as well as related marketing technology components included within subscription and transaction revenue. We manage the business for sustainable organic growth and selectively utilize strategic acquisitions or divestitures to augment the trajectory of this growth.
As a result, we believe it is important for investors to also evaluate our growth on a pro forma basis, which is how we measure and manage the business internally. We calculate our pro forma revenue growth as though all acquisitions and divestitures that were completed as of the end of the latest period were closed as of the first day of the prior year period. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business.
For Q4 2024, year-over-year pro forma revenue growth was 7%, while year-over-year pro forma subscription and transaction revenue growth was 8.9%. The primary difference between the actual and pro forma 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 upsell opportunities, leading with payments. As Eric noted, we also exceeded the top end of our adjusted EBITDA guidance range.
Fourth-quarter adjusted EBITDA was $50.4 million, representing a 28.8% margin versus 25.4% in Q4 2023, which is 17% growth year over year. Q4 margin expansion was aided by seasonality in our business sequentially as well as the timing of some transformation investments. On a year-over-year basis, margins improved due to cost optimization initiatives, mix shift to higher-margin products and overall scale economies.
Adjusted gross profit in the quarter was $124 million, representing an adjusted gross margin of 70.9% versus 67.3% in Q4 2023. Adjusted gross profit improved largely as a result of positive mix shift in the business. As a percentage of revenue, payments and rebate revenue, both of which have 95% plus gross margin profiles, grew compared to the decline in marketing technology, which carries a lower gross margin profile.
Now turning to adjusted operating expenses, which are reconciled in the appendix to this presentation. Overall adjusted operating expenses modestly increased as a percentage of revenue from 41.9% to 42.1% for the quarter on a year-over-year basis, while improving on an LTM basis from 42.8% to 42%, representing our approach to balance the amount and timing of investments made in our solutions. We maintained our focus on improvement in customer satisfaction and acquisition while also highly focused on cost discipline and functional support areas.
Now turning to some key liquidity measures. We continue to generate significant free cash flow as we invest to grow our business. Cash flow from operations for the quarter was $48.4 million as compared to $36 million in Q4 2023. Levered free cash flow was $43.8 million in the quarter and for the trailing 12-month period, we generated more than $94 million in levered free cash flow.
Adjusted unlevered free cash flow was $39.1 million in the quarter and $134.5 million for the last 12 months, representing 31.5% and 20.5% year-over-year growth, respectively. We ended the quarter with $136 million in cash and cash equivalents, and we maintained $190 million of undrawn capacity on our revolver.
We have $532 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 2.2 times, consistent with our financial policy. We have $425 million of notional swaps at a weighted average rate of 3.91% for the floating rate component of our interest cost.
In December, we successfully repriced the fixed rate component of our term loan as part of the continued transformation and optimization efforts. The term loan was repriced at par and reduced the fixed price component of the interest rate by 50 basis points while also eliminating the credit spread adjustment to now bear an interest rate of SOFR plus 2.5%, resulting in an annualized interest cost savings of approximately $3.3 million. We continue to view strong free cash flow generation as a key priority for the company.
With it, we are able to invest in our growing business while also allowing us to efficiently allocate capital across a spectrum of opportunities, including the outstanding buyback authorization and M&A prospects. In the fourth quarter, we repurchased approximately 623,000 shares for $7 million at an average price of $10.88 per share.
Based on the Board’s authorization as of December 31, 2024, we had approximately $32.7 million remaining in our repurchase authorization that runs through year-end 2025. I would now like to finish by discussing our outlook for the first 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 will exclude Marketing Technology Solutions.
Please note that Marketing Technology Solutions will be reported as discontinued operations beginning in Q1 2025. To assist in the comparison of 2025 guidance to prior year results, we have provided the associated amounts of revenue and adjusted EBITDA for Marketing Technology Solutions included in our consolidated results for 2024 as part of this presentation.
For the first quarter of 2025, we expect total revenue of $138 million to $141 million and adjusted EBITDA of $39 million to $41 million. For the full year 2025, we expect total revenue of $581 million to $601 million and adjusted EBITDA of $167.5 million to $175.5 million.
Operator, we are now ready to take the first question.

Operator

(Operator Instructions) Bhavin Shah, Deutsche Bank.

Bhavin Shah

Thanks for taking my questions. Congrats on the strong finish to the year. I guess, first, just on the macro, can you just give us an update on what you’re seeing with the health of your customers? And any impact you’re seeing from tariffs or hesitancy as we approach a new administration?

Eric Remer

Matt, do you want to take that?

Matthew Feierstein

Yeah, absolutely. So thanks, Bhavin, for the question. Right now, seeing really nothing currently discernible in either acquisition, utilization or churn trends that would point to a macro impact at this point in time. And as you know, given the highly digital nature of our new customer acquisition funnel, we do have real near-time indicators that we continue to monitor.
So we look at things like cost per lead, lead to close conversion rates, cost per acquisition, sales cycle times, new sales ASPs to really assess that macro impact along with additional utilization and retention indicators. And right now, again, nothing discernible, but obviously something that we’re going to keep our finger on.

Eric Remer

And the only thing I’ll add to that, if you look at our two main verticals, which represent 95% of our business, our home field service business is really primarily great fix. We don’t do new starts or things of that nature, and that really is pretty consistent regardless of macro. And then the second largest is our health services, EverHealth. And again, very consistent regardless of tariffs or macroeconomics that we see.

Bhavin Shah

That’s helpful there. And just a quick follow-up. I know you talked about augmenting your existing go-to-market with partnerships and channel optimization. Can you just expand on what you exactly mean by that? And how big is partnerships or channel today in terms of driving traffic?

Eric Remer

You want to take that?

Ryan Siurek

Yeah. I’ll certainly talk about it from my perspective and then perhaps Evan and Josh will follow on from the vertical perspective. I think we’ve always talked about partnerships as one leg of the stool of our new customer acquisition as we’ve always talked about, digital is by far the largest.
But partnerships and then in-person trade shows and conferences are really the other two legs of that three-legged stool of our customer acquisition. With digital being, as we’ve always talked about between 80% to 85% of that new customer acquisition.
Obviously, from a partnership perspective, that it’s probably the second stool, but a much smaller stool leg in that stool. Evan, anything to add from.

Evan Berlin

Yeah, it’s a great question. I would just say in EverHealth, focused on the existing partnerships we’ve got plus new partnerships that we see double-digit growth in that channel distribution, group of partners that we’ve got. And those are other affiliates and other EMRs that are leveraging our patient engagement capabilities as well as the marketplace that we’ve got within EverHealth.
And so there’s actually different channels within that third-party distribution and something we continue to invest in, to Matt’s point, to diversify our channel acquisition and also just reduce our cost of acquisition.

Bhavin Shah

Great. Thanks for taking my questions.

Operator

Alexander Sklar, Raymond James.

Alexander Sklar

Great. Thank you. Eric or Matt, on the accelerating customer growth that you referenced to now a little over 7% pro forma full year. Can you talk about how that played out from a linearity perspective versus the 3% in ’23? And then with that, what have been the biggest factors for the acceleration? Is that on the gross potential side? Is it more digital conversion, better on the demand? Just curious what’s played into that acceleration.

Matthew Feierstein

Yeah. I appreciate the question. Yeah, obviously, quite happy with the growth of customers. I think when you think about that total customer count, what goes into that, obviously, new customer acquisition trended nicely across the year, again, really driven by our digital efforts, but also, again, increasing investments in partnerships and the small other areas that we’ve been looking to diversify from that standpoint.
So across 2024, we certainly saw as we got into Q2 and Q3, some benefits of those efforts from a new customer acquisition standpoint. I wouldn’t say that beyond that, there’s anything from a trend standpoint. I think our execution from a new customer acquisition standpoint was consistent across the year.
And then from obviously, a retention standpoint, that’s the other side of the coin of the customer count. Retention was where we expected it to be, an area that we continue to invest in, how we engage with our customers are continuing to invest in our products to make them only more valuable and strengthen their value prop for our end customers. And we continue to iterate across our portfolio on that.
And I think across the course of 2024, that really manifested in that 7% growth of total customers of execution on both the NCA and the retention side.

Eric Remer

The only thing I’ll add to that. Thanks, Matt. We talked about that 7% growth, but I think the really important number to really focus on is the 740,000 customers. It’s a massive scale of SMB customers that gives us the opportunity, which we’re getting better and better at providing more value to by providing more services to them. So that continues to be a large focus of ours.
Obviously, we’re happy to continue that to grow. But the overall scale of that, I think it’s lost sometimes of how many customers we actually have within the EverCommerce ecosystem.

Alexander Sklar

Great answers. And Eric, I actually want to dovetail on that for the second question here. So the scale you’ve built out, you’re obviously divesting of the marketing solutions, but you’ve talked about how important some of these horizontal solutions are to your customer base in general.
So strategy post the marketing sale, can you just talk about the opportunity to enable more horizontal optionality, either more marketplace partners. You talked a lot about partnerships today. Just curious on that strategy broadly.

Eric Remer

Yeah. No, it’s a great question. And look, all of our customers, which is why we went to the marketing space in the first place, they need leads, they need some of the services we do provide. What we’ve seen in our efforts providing more value, we’ve seen the greatest success by a large amount in embedded finance, specifically payments. And so as we look to provide more value, I mean, we provide reputation management.
We provide other integrated services beyond payments, but we definitely are seeing that as a continued focus and really the core need of our customers at this time. So for things outside of the ecosystem that we need to partner to provide more value, yeah, we’ll bring in partnerships, and we have those as we speak, and Matt can talk about some of those as well.
But I think as we look at the future of where we’re going as an organization, we want to make sure we create the best SaaS products for our customers, provide the best integrated embedded finance that they’re looking for to grow their business and really stay laser-focused and make sure that we’re dialing those two objectives. Anything to add to that?

Matthew Feierstein

Yeah. I mean I think you said it all internally, super focused on payments, on the customer experience solutions on edge, which we’ve talked about over the recent quarters. And again, we certainly — you heard Eric talk about the value that marketing technology solutions can provide to end customers. That’s certainly something that through third-party partnerships, we can continue to provide to those end customers.

Alexander Sklar

Great, thank you both. Congrats on the quarter.

Eric Remer

Thank you.

Operator

Matthew Hedberg, RBC Capital Markets.

Michael Richards

Hey, guys. It’s Mike Richards on from Matt. Thanks for taking the question. Obviously, there’s a lot of moving parts, the divestiture, but Ryan, since this is your first guide, you’re owning as a CFO. How should we think about the guidance philosophy relative to guides in the past? And then what are the levers to that growth acceleration in the back half that we should be looking for?

Ryan Siurek

Yeah. I think — I mean, we feel good about the guide. I think you can see from a guidance perspective for 2024, we came in almost on top of where our guidance was from an actual perspective and exceeded a beat on a quarterly basis throughout the year. We’re trying to give a 50-50 in terms of our view of where the business will be. You’re right, there’s a lot of moving parts.
We had the fitness divestiture in 2024. Obviously, we announced the — that we’re going through a process right now for marketing technology, really to focus in the areas that both Eric and Matt had talked about. But from a guide perspective, in the areas that we will be representing our continuing operations, we feel strongly about our ability to see where that is right now.
Should anything change, we’ll update that. But right now, we spend a good deal of time looking at the historicals and also looking at the trends that we see in the marketplace that Matt talked about upfront. And yeah, for first quarter and for the full year, we feel good right now.

Eric Remer

And the word we used all of last year is just being prudent. I think we want to put numbers out there that we feel very confident that we will beat and exceed. And as we did every quarter last year and for the full year, we expect to get the same this year.

Michael Richards

Got it. And then it was awesome to see the acceleration in payments. Maybe you guys could talk more on the investments that you’re making into that platform? And what are some of the biggest frictions you tend to see in adoption? And maybe would those investments be addressing those frictions that you’re seeing with customers?

Ryan Siurek

Yeah, for sure. I mean I think you’ve heard us talk about the payments funnel before, getting more — increasing customers to attach, getting those attached customers to activate and then expanding the wallet share of those customers.
I think one of the largest friction points we’ve seen across all of our time dealing with SMBs is just inertia of change, and that’s something that obviously we’re going to — we have experienced and we’ll continue to push through with investments to remove that inertia of change.
So again, when you look at increasing attach rates to our existing SaaS customers, we’ve talked — you heard Eric talk about prior our integrated sales motion, so making investments there in terms of selling SaaS and payments at the same time, continue to invest in our payment sales team. So having payment sales reps that can follow up beyond a SaaS sales rep when there’s a payments lead that didn’t close, closing on that.
In our activation funnel, really putting customer success resources into the ground to follow up on, great, we’ve got a payments customer attach. They’re starting to utilize how do we expedite and drive additional utilization there. So again, that’s another area of investment.
And when you think about expanding wallet share, really the expansion of our product landscape, we’ve talked about that over several quarters from a payments perspective, improving payment workflows within our core systems of action, the addition of functionality like tap to pay across the payments ecosystem. So all three of those core areas of the funnel, we are actively making investments to drive further penetration beyond where we are today.

Michael Richards

Great. Thanks.

Operator

Kirk Materne, Evercore ISI.
(Operator Instructions)
Aaron Kimson, Citizens.

Aaron Kimson

Great. Thanks, guys. Congrats to Evan on the new role running Everhealth. How should we think about the payments opportunity and the penetration or maturity of that motion within EverHealth relative to EverPro.

Evan Berlin

Yeah. Good to see you a couple of weeks back. I think ultimately, the opportunity is a little bit smaller when you look at the EverHealth business versus EverPro, just when you think about the overall health care dynamics where you’ve got patient payments as a percentage of the total, but the businesses tend to be larger.
The needs in terms of actually giving patients lots of ways to make those payments, especially as you think about the advent and the acceleration of higher deductible plans, it’s absolutely something that our customers need, deeply embedded within both their patient engagement and their core practice management solutions. So I would say we’re very much in the early stages, especially in our core platforms like DrChrono, where we do have payments integrated.
We’re still, to Matt’s point, working on building out all of the workflows and then driving all of the funnel steps within our health services ecosystem, get customers enabled, activated and ultimately expand share of wallet as we invest in the product. So we see a lot of continued opportunity within EverHealth from a patient payments perspective.

Aaron Kimson

That’s helpful. And then the 740,000 customers is great to see for the cross-sell opportunity. Given that we only get customer count once a year, I wanted to ask on the public call if there’s any color you can provide about how we should think about customer count on an ex-MarTech basis as of 12/31/24 to see if we can get an idea of how to model that as things happen throughout ’25. Thanks.

Brad Korch

Yeah, Aaron, this is Brad. It’s about — we’ll give the exact number when we get to next quarter, but it’s about 15,000 customers.

Aaron Kimson

Got it.

Operator

Kirk Materne, Evercore ISI.
(Operator Instructions)
Thank you. That is all the time we have for our question and answer session today. I would now like to turn the call back over to Mr. Eric Remer for closing remarks.

Eric Remer

Well, thank you for that. Thanks again for joining us today and for your continued support of EverCommerce. We are very excited about the transformation progress we have made and where it can take us both in ’25 and beyond, and we look forward to connecting with you individually over the next coming days and weeks. Thank you very much.

Operator

This concludes today’s program. Thank you all for participating. You may now disconnect.