EverCommerce(EVCM) - 2025 Q2 - Quarterly Report

Part I — FINANCIAL INFORMATION Financial Statements The company's financial statements for the period ended June 30, 2025, reflect a shift to profitability from continuing operations, with net income of $5.8 million for the quarter compared to a net loss of $2.6 million in the prior year period, while total assets remained stable at approximately $1.42 billion, and cash flow from operations significantly increased to $57.7 million for the first six months of 2025 Condensed Consolidated Balance Sheets Balance Sheet Summary (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $151,060 | $135,782 | | Assets held for sale | $48,336 | $11,422 | | Goodwill | $867,205 | $863,152 | | Total assets | $1,419,005 | $1,421,268 | | Liabilities & Equity | | | | Total current liabilities | $117,921 | $110,726 | | Long-term debt, net | $520,294 | $522,442 | | Total liabilities | $675,027 | $670,442 | | Total stockholders' equity | $743,978 | $750,826 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Statement of Operations Summary (unaudited, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $148,015 | $140,523 | $290,288 | $278,375 | | Operating income | $15,802 | $7,703 | $30,007 | $3,407 | | Net income (loss) from continuing operations | $5,761 | $(2,552) | $6,695 | $(18,562) | | Net income (loss) | $8,153 | $(3,376) | $440 | $(19,700) | | Diluted EPS (Total) | $0.04 | $(0.02) | $0.00 | $(0.11) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Six months ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $57,659 | $37,216 | | Net cash used in investing activities | $(13,745) | $(8,526) | | Net cash used in financing activities | $(29,576) | $(34,190) | | Net increase (decrease) in cash | $15,278 | $(6,138) | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail significant corporate actions, including the strategic decision to sell the marketing technology solutions, now classified as discontinued operations, and the 2024 disposition of Fitness Solutions, while also providing breakdowns of revenue, goodwill, debt, and equity activities, including an active stock repurchase program, and a subsequent event note details a debt refinancing in July 2025 that extended maturities and reduced interest margins - The company provides integrated SaaS solutions for service-based SMBs across three core verticals: EverPro (Home Services), EverHealth (Health Services), and EverWell (Wellness Services)[26] - On March 5, 2025, the Board committed to a plan to sell the company's marketing technology solutions, which are now classified as discontinued operations, with assets and liabilities presented as held for sale[33] Discontinued Operations (Marketing Technology Solutions) Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $34,536 | $36,870 | $63,168 | $69,131 | | Operating income (loss) | $2,399 | $(824) | $(6,325) | $(1,138) | | Assets held for sale (net) | $35,618 | - | $35,618 | $40,930 (as of Dec 31, 2024) | - In 2024, the company sold its Fitness Solutions, recognizing losses of $5.0 million and a goodwill impairment of $6.4 million for the six months ended June 30, 2024, though this divestiture did not qualify for discontinued operations reporting[44] - The company's stock repurchase program was increased to a total authorization of $250.0 million and extended through December 31, 2026, with $51.1 million remaining available under the program as of June 30, 2025[78][80][81] - Subsequent to the quarter end, on July 29, 2025, the company amended its credit facilities to refinance its term loan, extending the maturity to July 2031 and reducing the applicable interest margin by 25 basis points[116] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 5.3% revenue growth in Q2 2025 to the successful delivery of its core software to SMBs in home services, health, and wellness, highlighting a Pro Forma Revenue Growth Rate of 7.4% for the quarter, normalizing for divestitures, while profitability improved significantly with operating income rising to $15.8 million from $7.7 million year-over-year, driven by revenue growth and cost management initiatives, and Adjusted EBITDA from continuing operations increased to $45.0 million for the quarter, with strong liquidity of $151.1 million in cash and $155.0 million available under the revolver supporting strategic investments and the ongoing share repurchase program Overview - The company's strategy is a "land and expand" model, starting customers with core Business Management Software and then cross-selling adjacent solutions like Billing & Payments and Customer Experience tools[122] - Approximately 97% of revenue was recurring or re-occurring for the six months ended June 30, 2025, with the annualized net revenue retention rate also approximately 97% for the quarter ended June 30, 2025[126] Key Business and Financial Metrics - The Pro Forma Revenue Growth rate, which adjusts for acquisitions and divestitures, was 7.4% for both the three and six months ended June 30, 2025, indicating underlying business growth[137] Adjusted EBITDA Reconciliation (Continuing Operations, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) from continuing operations | $5,761 | $(2,552) | $6,695 | $(18,562) | | Adjustments (Interest, Taxes, D&A, etc.) | $39,196 | $41,985 | $83,207 | $96,645 | | Adjusted EBITDA from continuing operations | $44,957 | $39,433 | $89,902 | $78,083 | Results of Operations - Total revenues from continuing operations increased by $7.5 million (5.3%) for Q2 2025 and $11.9 million (4.3%) for YTD 2025 compared to the prior year, primarily driven by growth in business management software and billing/payment solutions[163] - Operating expenses as a percentage of revenue decreased from 94.5% to 89.3% in Q2 2025 year-over-year, reflecting improved margins and lower depreciation, amortization, and impairment charges[162] - Depreciation and amortization expense decreased by $3.3 million in Q2 2025, primarily due to a reduced rate of replacement assets from fewer recent business acquisitions[169] - The loss from discontinued operations for YTD 2025 increased to $6.3 million, driven by a $9.0 million impairment charge related to the marketing technology disposal group[173] Liquidity and Capital Resources - As of June 30, 2025, the company had $151.1 million in cash and cash equivalents and $155.0 million of available borrowing capacity under its Revolver[176] - Net cash from operating activities increased to $57.7 million for the first six months of 2025, up from $37.2 million in the same period of 2024, due to lower costs from transformation initiatives and improved cash collections[178][179] - The company repurchased and retired 3.1 million shares for $31.8 million in the first six months of 2025 under its stock repurchase program[199] Quantitative and Qualitative Disclosures About Market Risk The company reports that there have been no material changes to its disclosures regarding market risk from those described in its Annual Report on Form 10-K - There have been no material changes to the company's market risk disclosures since the last Annual Report on Form 10-K[206] Controls and Procedures Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective due to a previously disclosed material weakness in internal control over financial reporting, which the company is actively working to remediate - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a previously identified material weakness in internal control over financial reporting[207] - The company is continuing its efforts to remediate the material weakness, with no changes during the quarter identified that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[208] Part II — OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings arising in the ordinary course of business, and management does not expect the ultimate resolution of these matters to have a material adverse effect on the company's financial condition or operating results, with specific details on a putative class action lawsuit provided in Note 17 of the financial statements - The company is subject to various legal proceedings but does not believe their resolution will have a material adverse effect on its business or financial results[210] Risk Factors There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred[211] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase activity under its publicly announced program, with approximately 2.0 million shares repurchased for a total of $20.6 million during the second quarter of 2025 Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Total Cost (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | 616,214 | $9.91 | ~$6,107 | | May 2025 | 615,384 | $10.18 | ~$6,265 | | June 2025 | 812,523 | $9.96 | ~$8,092 | | Total Q2 2025 | ~2,044,121 | - | ~$20,600 | Other Information On June 12, 2025, CEO Eric Remer entered into a Rule 10b5-1 trading plan for the potential sale of up to 1.0 million shares of company common stock, effective until September 10, 2026, or upon certain other events - CEO Eric Remer established a Rule 10b5-1 trading plan on June 12, 2025, for the sale of up to 1.0 million shares of common stock[215] Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including amendments to credit agreements, officer certifications, and XBRL data files