EverCommerce Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 6, 2025

Key Takeaways

  • Positive Sentiment: Q2 results exceeded guidance with revenue of $148 M (up 5.3% YoY; 7.4% pro forma) and adjusted EBITDA of $45 M at a 30.4% margin, marking a 230 bp margin expansion.
  • Positive Sentiment: Payments revenue grew 6.8% YoY on a pro forma basis, representing 21% of total revenue at ~95% gross margin, and total payment volume rose 7% YoY to ~$12.9 B.
  • Positive Sentiment: Multi-product adoption accelerated, with 261 K customers enabled for >1 solution (32% YoY growth) and 112 K actively using >1 solution (29% YoY growth), fueling cross-sell and upsell.
  • Positive Sentiment: Debt repricing and extension delivered ~$1.3 M in annual interest savings, left $155 M of undrawn revolver capacity, and supported a $20.6 M share repurchase with $51.1 M remaining authorization.
  • Neutral Sentiment: For FY 2025, revenue guidance was maintained at $581 M–$600 M while adjusted EBITDA guidance was raised to $171 M–$177 M, reflecting prudent top-line assumptions alongside higher profitability targets.
AI Generated. May Contain Errors.
Earnings Conference Call
EverCommerce Q2 2025
00:00 / 00:00

There are 9 speakers on the call.

Operator

Thank you for standing by, and welcome to EverCommerce's Second Quarter twenty twenty May Call. My name is Shannon, and I will be your operator for today. After the speakers' presentation, there will be a question and answer As a reminder, this conference call is being recorded today, Wednesday, 08/06/2025. And now I would like to turn the conference over to Brad Korch, SVP and Head of Investor Relations for EverCommerce. Please go ahead.

Speaker 1

Good afternoon and thank you for joining. Today's call will be led by Eric Riemer, EverCommerce's Chairman and Chief Executive Officer and Ryan Serak, EverCommerce's Chief Financial Officer. Joining them for the Q and A portion of the call is EverCommerce's President, Matt Feinstein, 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 for the three months ended 06/30/2025. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce website, www.evercommerce.com.

Speaker 1

The slide presentation and earnings release are also directly available on the site. Please turn to Page two of our earnings call presentation while I review our Safe Harbor statement. Statements made on this call and contain the earnings material 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.

Speaker 1

We undertake no obligation to publicly update or revise these forward looking statements except as required by law. We 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 our earnings call presentation. As a reminder, following our announcement in March that we are seeking strategic alternatives in the Marketing Technology Solutions business, 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.

Speaker 1

All financial and operating metric results are presented related to continuing operations only unless otherwise specified. I will now turn it over to our CEO, Eric Bremer. Please continue.

Speaker 2

Thank you, Brad. I'll begin our prepared remarks focusing 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 form a basis, which adjusts prior year for the sale of fitness solutions.

Speaker 2

Adjusted EBITDA of $45,000,000 also be the top end of our guidance range, representing a 30.4% margin. Adjusted EBITDA margin expanded more than two thirty basis points year over year. Payments revenue, excluding the fitted solutions, grew 6.8% year over year. Finally, I'd like to highlight that the end of the July, repriced and extended our credit facility, increasing financial flexibility and resulting in approximately $1,300,000 in annual interest savings. EverCommerce provides SaaS solutions for the services of the economy.

Speaker 2

We offer tremendous value to our customers by providing the system of actions 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 and 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 form a basis for the last twelve months, we generated $574,100,000 revenue representing 7.9% year over year growth.

Speaker 2

With subscription and transaction revenue growing 8.1% year over year. We generated a 30.7% adjusted EBITDA margin on an LTM basis. Finally, our annualized total payment volume or TPV expanded to approximately $12,900,000,000 Accelerating payments adoption and utilization continues to be one of our highest priorities. And in 2025, we are making specific investments in our product capabilities and go to market motions to prioritize payments attachments at the point of initial sale. These include product and capability investments to expand the addressable payments volume within our system of actions, as well as go to market and sell resource to catalyze incremental enablement and utilization.

Speaker 2

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 point acceleration in growth rate over the prior quarter's 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 thousand basis point 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.

Speaker 2

As we noted 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 getting our customers to actively process on our platform.

Speaker 2

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

Speaker 2

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 $12,900,000,000 representing nearly 7% year over year growth. Within this, we continue to see higher TPV growth at 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.

Speaker 2

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.

Speaker 3

Thanks, Eric. Total reported revenue in the second quarter was $148,000,000 up 5.3% from the prior year period. Subscription and transaction revenue, our primary recurring revenue base, was $142,800,000 For Q2 twenty twenty five, year over year pro form a subscription and transaction revenue growth was 7.4. The difference between actual and pro form a revenue growth rate is to present information on a comparable basis and is attributable to the removal of prior year revenue associated with the sale of our fitness solutions that closed in 2024. Within pro form a subscription and transaction revenue, pro form a payment revenue growth was 6.8%.

Speaker 3

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 $114,600,000 representing an adjusted gross margin of 77.4% versus 77.5% in Q2 twenty twenty four, relatively flat across the comparison period. Second quarter adjusted EBITDA was $45,000,000 which is 14% growth year over year. Adjusted EBITDA margins of 30.4% compares to 28.1% in Q2 twenty twenty four. Q2 year over year margin expansion of over two thirty 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.

Speaker 3

On a year over year basis, margins improved due to cost optimization initiatives, mix 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 acquisition while also remaining highly focused on cost discipline in functional support areas.

Speaker 3

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 $27,000,000 improving from $23,900,000 generated in Q2 twenty twenty four. Levered free cash flow was $18,900,000 in the quarter and for the trailing twelve month period, we generated nearly $110,800,000 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.

Speaker 3

Adjusted unlevered free cash flow was $34,900,000 in the quarter and $143,700,000 for the last twelve months, representing 16.218.8% year over year growth respectively. We ended the quarter with $151,000,000 in cash and cash equivalents and $155,000,000 of undrawn capacity on our revolver. As of June 30, we had $529,000,000 of debt outstanding. Our total net leverage as calculated per our credit facility was approximately two times and continues to demonstrate our deleveraging from strong operational performance and free cash generation. We have $425,000,000 of notional swaps at a weighted average rate of 3.91% that effectively hedge the floating rate component of our interest cost through October 2027.

Speaker 3

In July, we've repriced and extended our outstanding term loan for an additional three years through July 2031 and further reduced our interest cost by 25 basis points to SOFR plus 2.25%. In addition, we extended our $155,000,000 revolving credit facility, which steps down in capacity to $125,000,000 in July 2026 and continues through July 2030. The repricing on the term loan results in interest cost savings of approximately $1,300,000 on an annualized basis, and the extension of the term loan and revolving credit facility provides financial flexibility. In the second quarter, we repurchased approximately 2,000,000 shares for $20,600,000 at an average price of $10.1 per share. Based on the shares repurchased through 06/30/2025, we have approximately $51,100,000 remaining in our total repurchase authorization.

Speaker 3

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 2025, we expect total revenue of 146,500,000.0 to $149,500,000 and adjusted EBITDA of 41,000,000 to $43,000,000 For full year 2025, we expect total revenue of $581 to $6.00 $1,000,000 and we are increasing our guidance for adjusted EBITDA to a range of 171,000,000 to $177,000,000 Operator, we are now ready to take the first question.

Operator

Thank you. Our first question comes from the line of Bhavan Shah with Deutsche Bank. Your line is now open.

Speaker 4

Great. Thanks for taking my question and congrats on the strong quarter. Eric, maybe just for you to start off, can you just maybe give us 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?

Speaker 2

Yeah. When we talk about the transformation optimization, many of those are ongoing scenarios that we're going to continue to look for opportunities, specifically in optimization, continue to gain more margin as we get more efficient across the organization. From a transformation perspective, it was really focused on really creating more energy and more focus within the BUs and the specific verticals, EverHealth and EverPro. Both our CEOs that we've talked to before, Evan Berlin and Josh MacArthur, are both doing a phenomenal job building out organizations, building out full management teams, getting the teams closer to the end customer, which we're starting to see really positive results in efficiency and sales efficiency and marketing efficiency and other things that we really had expected to happen. And we're starting to see some of those green shoots happen already.

Speaker 4

That's great. And just a quick follow-up for Ryan. I think the second quarter over 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?

Speaker 3

Yes. I appreciate the question. Thanks, Bhavan. 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.

Speaker 3

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

Speaker 5

That's helpful. Thanks for taking my questions.

Operator

Thank you. Our next question comes from the line of Kirk Materne with Evercore ISI. Your line is now open.

Speaker 6

Hi, this is Bill on for Kirk and thanks for taking my question. What are some of the embedded AI functionalities that you believe will enhance the overall customer experience of your software going forward?

Speaker 7

Yeah, I'll start in terms of things that we've actually done from an AI perspective, and then I'll pass it over to Evan and potentially Josh, who will talk about some of the things that we're considering. Over the last eighteen 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 solution. We've launched customer survey tools within our customer experience solutions. And really, those have helped us improve prospect targeting for the end customer, end customer engagement and actionable insights that our customers now have because of the embedded AI that we've put in those products. And AI advancement within our products is now a core part of our future product roadmaps really across all of our verticals.

Speaker 7

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

Speaker 8

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 AmbienScribe, 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 Integral.

Speaker 2

Great, and then can you

Speaker 6

provide us, do you have any early thoughts on the passage of the One Big Beautiful bill in terms of tax implications?

Speaker 3

Yes, 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.

Speaker 6

Appreciate it. Thank you.

Operator

Thank you. Our next question comes from the line of Matt Hedberg with RBC. Your line is now open.

Speaker 5

Great. Thanks for taking my questions. Congrats on another good quarter. I guess circling back on the revenue guide, you beat expectations on the top line for now two straight quarters and you've maintained the full year guide. I can appreciate it's probably some conservatism from macros in there, but just making sure there's nothing else like deals pulled into the first half or anything that you sort of flagged for the second half?

Speaker 5

Because it feels like you're coming off of a strong first half of the year.

Speaker 3

The first half of the year was strong and 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 and we look at kind of 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 payments.

Speaker 3

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. And yes, 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.

Speaker 5

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

Speaker 6

give a little bit

Speaker 5

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

Speaker 7

Yeah, for sure. I'm going to focus on customer support. I think we have talked about this in the past, but that continues to be an area where again, 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 within 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.

Speaker 7

We've got customer SAT scores that are above 85% and generating some nice significant cost avoidance from that standpoint. And that is literally just across our chat channel. We're going to add email and voice channel there and we expect that impact to grow meaningfully. So, we are excited. It is still the early innings from a functional standpoint of that.

Speaker 7

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.

Speaker 5

Great. Thanks for the color.

Operator

Thank you. Our next question comes from the line of Alexander Sklar with Raymond James. Your line is now open.

Speaker 5

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.

Speaker 5

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.

Speaker 7

Yes. 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 product 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.

Speaker 7

And

Speaker 1

also you heard Eric talk through across our

Speaker 7

core growth pillars and 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 at some of our solutions where we didn't have them, allow us to access an unaddressable part of the base that we had before. In areas like Wahwachar 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 and really drive that merchant processing volume from where it was to where we believe it can be. So again, really pleased with the progress we've made. Obviously, there is significant runway for us to continue to drive more utilization of second, third, fourth products into the base. And as we continue to integrate more of those products into our systems of action, expect to do just that.

Speaker 2

And 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. And our job is to kind of continue to execute down funnel so we can increase revenue and increase retention as more customers take more products, obviously that grows revenue and the more products an individual customer takes it significantly increases retention as well.

Speaker 5

Okay, thanks. Good color there. And then can you maybe help frame the spread between 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 causing that bit of the spread?

Speaker 7

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

Speaker 7

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 five payment opportunities where we have the most significant executional approach and investments and those are growing at a much faster rate. The TPV there is growing between 12% to 13% from a year over year perspective and many of those are less than 10% penetrated.

Speaker 7

So the opportunity is incredibly large. So yes, there's a lag from a funnel perspective and again, we look to continue to grow through just some of the more mature legacy parts of the portfolio.

Speaker 5

Great. Thank you very much.

Operator

Thank you. Our next question comes from the line of Aaron Kimsom with Citizens. Your line is now open.

Speaker 5

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 2024, obviously, is a big piece of the thesis going forward. Given the Circle 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 PayCrate or method of payment in your service based SMB customer base over the medium and long term, if at all?

Speaker 2

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

Speaker 2

So we will continue to become continue to be very focused on what our customers' needs, 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 be 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 in the definitely not a short term roadmap. And I wouldn't even say midterm. Clearly that can shift if the market sentiment shifts.

Speaker 2

But right now that's not a core focus.

Speaker 5

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 Martech 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 out years? Thanks.

Speaker 3

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

Speaker 3

We continue with the process on the Martech side and we will continue with the optimization efforts that we have. And I think you can see that coming through from our operating expenses as a percentage of revenue overall. 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.

Operator

Thank you. And I'm currently showing no further questions at this time. I would now like to hand the call back over to Eric Riemer for closing remarks.

Speaker 2

Thanks for that. Well, thank you guys for joining us today. Not only did 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 and I look forward to sharing our continued success in the coming quarters. Thanks again.

Operator

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

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