EverCommerce(US:EVCM)2022-05-08 16:00Business Overview - EverCommerce serves over 600,000 customers across three core verticals: Home Services, Health Services, and Fitness & Wellness Services[127]. - EverCommerce has acquired 52 companies since inception to deepen competitive moats and expand into new verticals and geographies[140]. - The company’s Business Management Software is typically the first solution adopted by customers, facilitating cross-selling of additional products[135]. Financial Performance - The Pro Forma Revenue Growth Rate for the three months ended March 31, 2022, was 20.2%, indicating strong underlying business growth[149]. - Total revenues for the three months ended March 31, 2022, were $143.576 million, a 36.9% increase from $104.906 million in the same period of 2021[175]. - Adjusted Gross Profit for the three months ended March 31, 2022, was $92.8 million, compared to $69.2 million for the same period in 2021[153]. - Adjusted EBITDA for the three months ended March 31, 2022, was $22.962 million, compared to $21.310 million for the same period in 2021, reflecting an increase of 7.7%[158]. - Approximately 95% of revenue for the three months ended March 31, 2022, was recurring or re-occurring, with an annualized net revenue retention rate of over 100%[137]. - The net loss for the three months ended March 31, 2022, was $13.309 million, an improvement from a net loss of $15.995 million in the same period of 2021[175]. Revenue Breakdown - Subscription and transaction fees revenue increased by $32.806 million or 43.6%, reaching $108.001 million for the three months ended March 31, 2022[177]. - Marketing technology solutions revenue grew by $4.516 million or 17.8%, totaling $29.904 million for the same period[177]. Cost and Expenses - Cost of revenues (exclusive of depreciation and amortization) increased by $15.071 million or 42.2%, amounting to $50.745 million for the three months ended March 31, 2022[178]. - Cost of revenues as a percentage of total revenues was 35.3% for the three months ended March 31, 2022, compared to 34.0% for the same period in 2021[180]. - Sales and marketing expenses increased by $10.5 million or 53.1% for the three months ended March 31, 2022, compared to the same period in 2021, representing 21.0% of revenues[181]. - Product development expenses rose by $7.3 million or 70.8% for the three months ended March 31, 2022, accounting for 12.3% of revenues[182]. - General and administrative expenses increased by $9.1 million or 41.3% for the three months ended March 31, 2022, making up 21.7% of revenues[183]. - Depreciation and amortization expenses grew by $3.7 million or 15.6% for the three months ended March 31, 2022, representing 19.1% of revenues[185]. - Interest and other expense, net, decreased by $7.5 million or 57.7% for the three months ended March 31, 2022, constituting 3.8% of revenues[186]. - Income tax benefit increased by $2.2 million or 62.7% for the three months ended March 31, 2022, representing 4.0% of revenues[187]. Cash Flow and Liquidity - Net cash provided by operating activities was $12.9 million for the three months ended March 31, 2022, compared to a net cash used of $5.4 million in the same period of 2021[192]. - As of March 31, 2022, the company had cash, cash equivalents, and restricted cash of $105.0 million, with $190.0 million of available borrowing capacity under its Revolver[191]. - Net cash used in investing activities was $4.4 million for the three months ended March 31, 2022, primarily driven by software development costs of $3.5 million[196]. Debt and Financing - As of March 31, 2022, there was $547.3 million outstanding under the Credit Facilities, all related to Term Loans, with no amounts outstanding under the Revolver[208]. - The effective interest rate on the Term Loans was approximately 4.0% for the three months ended March 31, 2022[208]. - The Revolver has a variable commitment fee expected to range from 0.25% to 0.375% per annum, with a fixed fronting fee for letters of credit of 0.125% per annum[207]. - The Term Loans mature in July 2028, while the Revolver matures in July 2026, allowing amounts borrowed under the Revolver to be repaid and re-borrowed[207]. - As of March 31, 2022, the company was in compliance with the covenants under the Credit Facilities[209]. Corporate Governance and Compliance - The company has not experienced any material changes to its contractual obligations as of March 31, 2022, compared to those disclosed in the Annual Report on Form 10-K[210]. - There were no material changes to the company's critical accounting policies during the three months ended March 31, 2022[212]. - The company evaluated the effectiveness of its disclosure controls and procedures and concluded they were effective at the reasonable assurance level as of March 31, 2022[217]. - There were no changes in the internal control over financial reporting during the quarter ended March 31, 2022, that materially affected the internal control[219]. - The company qualifies as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012, allowing it to adopt new accounting guidance within the same time periods as private companies[214]. Market and Economic Impact - The COVID-19 pandemic initially negatively impacted financial performance, particularly in the Fitness & Wellness and Health Services verticals, but recovery has been observed since[142]. - EverCommerce's marketing technology solutions help businesses manage campaigns and improve return on investment across the customer lifecycle[134]. - The company utilizes a "land and expand" strategy to increase customer engagement and retention through cross-selling solutions[135].