EverCommerce(EVCM) - 2025 Q1 - Quarterly Report

Customer Base and Revenue - As of December 31, 2024, EverCommerce served over 740,000 customers across three core verticals: Home Services, Health Services, and Wellness Services[116] - Approximately 97% of revenue for the three months ended March 31, 2025, was recurring or re-occurring, with an annualized net revenue retention rate of approximately 97%[122] - The Pro Forma Revenue Growth Rate was 7.4% for the three months ended March 31, 2025, driven by new customer acquisition and increased solutions for existing customers[133] - The company reported a revenue growth rate of 3.2% for the three months ended March 31, 2025, including pre-divestiture revenue from Fitness Solutions of $5.4 million[132] - Total revenue for the three months ended March 31, 2025, was $142,273,000, representing a 3.2% increase from $137,852,000 in the same period of 2024[136] - Total revenues increased by $4.4 million, or 3.2%, to $142.3 million for the three months ended March 31, 2025, compared to $137.9 million in the same period in 2024[158] Financial Performance - Adjusted EBITDA from continuing operations rose to $44,945,000, up 16.3% from $38,650,000 in the same period last year[139] - Net income from continuing operations improved significantly to $934,000, compared to a loss of $16,010,000 in the prior year, marking a turnaround of $16,944,000[139] - The company reported a net loss of $7,713,000 for the three months ended March 31, 2025, a significant improvement from a loss of $16,324,000 in the same period last year[155] Expenses and Cost Management - Total operating expenses decreased by 9.9% to $128,068,000 from $142,148,000 in the previous year[155] - Cost of revenues as a percentage of total revenue decreased from 22.9% in Q1 2024 to 21.9% in Q1 2025, improving gross margin[157] - General and administrative expenses as a percentage of revenue decreased from 23.0% to 22.0% year-over-year[157] - Stock-based compensation expense increased to $6,755,000 from $5,410,000, reflecting a rise of 24.8%[155] - Sales and marketing expenses rose by $1.2 million, or 4.4%, to $28.8 million, primarily due to increased advertising and personnel costs[160] - Product development expenses increased by $0.7 million, or 3.4%, to $20.0 million, mainly driven by higher outsourced services[161] - General and administrative expenses decreased by $0.4 million, or 1.1%, to $31.3 million, improving as a percentage of revenue from 23.0% to 22.0%[162] - Depreciation and amortization expenses decreased by $4.1 million, or 19.8%, to $20.9 million, primarily due to lower amortization of intangible assets[163] Cash Flow and Liquidity - Net cash provided by operating activities was $30.7 million for the three months ended March 31, 2025, compared to $13.3 million in the same period in 2024[174] - As of March 31, 2025, the company had cash, cash equivalents, and restricted cash of $148.4 million, with $190.0 million of available borrowing capacity under its Revolver[172] Debt and Financing - The company has a credit agreement providing for a Term Loan of $550.0 million and a Revolver with a capacity of $190.0 million[180] - As of March 31, 2025, the outstanding amount under the Credit Facilities was $530.8 million, all related to the Term Loan, with no amounts outstanding under the Revolver[189] - The effective interest rate on the Term Loan was approximately 7.17% for the three months ended March 31, 2025[189] - The company is subject to a financial covenant requiring a first lien leverage ratio of 7.50 to 1.00 or less if revolving loans exceed 35% of the aggregate commitments[182] - The company has entered into interest rate swap agreements to convert a portion of the floating rate component of the Term Loan to fixed rate[186] - The company expects the commitment fee for the Revolver to range from 0.25% to 0.375% per annum[187] - As of March 31, 2025, the company was in compliance with the covenants under the Credit Facilities[189] Shareholder Returns - The company repurchased 1.1 million shares of common stock for approximately $11.2 million during the three months ended March 31, 2025[191] - The total authorization for the stock repurchase program has been increased to $250.0 million, with $21.6 million remaining available as of March 31, 2025[190][191] - The Term Loan matures in July 2028, while the Revolver matures in July 2026[188] Market Conditions - The macroeconomic climate, including rising inflation and supply chain disruptions, poses challenges to revenue and demand for EverCommerce's products[124] Product Development and Strategy - EverCommerce's vertically-tailored Business Management Software serves as the primary point-of-entry for customers, facilitating cross-selling opportunities[119] - The company maintains a strategy of "land and expand," allowing for customer acquisition and expansion through product development and acquisitions[118] - The company expects continued investment in product development, anticipating an increase in related expenses as a percentage of revenue in 2025[147] - EverCommerce's Customer Experience Solutions enhance customer engagement and retention through innovative communication tools[119] - The company is actively engaged in selling its marketing technology solutions, with a sale transaction expected in 2025[125]