EverCommerce Conference Call Summary Company Overview - **Company**: EverCommerce (NasdaqGS:EVCM) - **IPO Year**: 2021 [1] Industry Focus - **Main Verticals**: - EverPro (Home Services) - EverHealth (Health Services) - **Revenue Contribution**: Approximately 95% of total revenue from these two verticals [6] Key Insights and Trends - **2025 as a Transition Year**: - 2023 and 2024 were years of transformation and optimization for the organization, focusing on stabilization in 2025 [4][9] - **Market Conditions**: - Current market characterized by uncertainty and volatility, but essential services in home and health sectors are relatively stable and anti-cyclical [3][12][13] Financial Performance - **EBITDA Margin Improvement**: - Achieved a 500 basis points improvement in EBITDA margin from 2022 to 2025, with nearly 1,000 basis points improvement since IPO [7][8] - **Growth Strategy**: - Focus on efficiency, customer value, and reinvestment in key verticals to drive growth in 2026 and beyond [9][59] Market Opportunities - **Underpenetrated Market**: - EverPro has around 300,000-400,000 contractors using its services, representing less than 2% market penetration in North America [18][19] - Total Addressable Market (TAM) includes approximately 30 million contractors globally [20] - **Cross-Selling Opportunities**: - Significant potential in payments, customer engagement solutions, and AI products [27][28][29] AI Integration - **Acquisition of ZyraTok**: - Introduction of AI-driven customer engagement solutions, including an AI Receptionist, aimed at enhancing customer service and operational efficiency [29][30][39] - **AI Applications in EverHealth**: - Plans to integrate AI solutions for ambient voice note-taking and billing processes to improve user experience [50][52] Organizational Changes - **Leadership Changes**: - New leadership in both EverPro and EverHealth, with a focus on building strong teams to drive growth [55][56] - **Talent Acquisition**: - 50 new leadership positions created to enhance focus and execution within the two main verticals [55] Future Outlook - **Growth Projections**: - Anticipated mid-double-digit growth rates as the company reinvests in its core verticals and leverages AI and payment solutions [58][59] - **Capital Allocation**: - Focus on using generated cash flow for strategic acquisitions and share buybacks to enhance shareholder value [66][70] Conclusion - **Long-Term Vision**: - EverCommerce aims to solidify its leadership in the home and health service markets, leveraging technology and operational efficiencies to drive sustainable growth [65][69]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $192 million, an 11% year-over-year increase, normalized for the previous year's political campaign revenue [17] - Cloud Communications Services revenue reached $142 million, reflecting an 8% year-over-year increase on a normalized basis [17] - Adjusted EBITDA was $24 million, exceeding expectations due to higher revenue and lower spending [18] - Non-GAAP gross margin remained strong at 58% [17][18] - Free cash flow generated in the quarter was $13 million, with a trailing 12-month free cash flow growth of 35% year-over-year [18][21] Business Line Data and Key Metrics Changes - Enterprise Voice revenue increased by 22% year-over-year, driven by strong adoption among existing customers and new customer ramping [19] - Programmable Messaging achieved a normalized growth of 6% year-over-year [20] - Average annual revenue per customer reached a record of $231,000, growing 46% over the last three years [21] Market Data and Key Metrics Changes - The net retention rate for Q3 was 105%, and 107% when excluding political campaign revenue [20] - The largest customer category grew revenue by 7% year-over-year, more than doubling the growth rate from the previous year [20] Company Strategy and Development Direction - The company is evolving its business model towards a higher mix of recurring software-driven revenue and adding intelligent automation and value-added services [5] - The focus is on being the provider of choice for conversational AI deployment, with a strategy that includes native AI within CCaaS platforms and public APIs [7][8] - The Trust Services portfolio was highlighted as a key lever for competitive advantage, addressing customer challenges related to call answer rates [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued momentum in voice AI and increasing software revenue, positioning the company for a solid fourth quarter and start to the new year [22] - The company anticipates continued growth in Global Voice Plans and Enterprise Voice customers, along with a robust political campaign messaging season [23] Other Important Information - The company won the Technology Disruptor award from Ally Financial, recognizing its role in transforming customer experience [5] - The introduction of new AI-driven products, such as the AI Receptionist and Bandwidth Activation Agent, aims to enhance customer experience and operational efficiency [9][10] Q&A Session Summary Question: Can you characterize overall demand and customer conversations? - Management noted a record number of $1 million plus revenue customers, reflecting broad-based demand and healthy growth in voice [30] Question: What are the 2026 medium-term targets? - The company aims for above-market revenue growth, 60% and greater gross margins, 20% and greater EBITDA margin, and 15% and greater free cash flow margin [32] Question: How are new products impacting Enterprise Voice and Global Voice Plans? - New products are initially launched for enterprise customers but are quickly adopted by Global Voice Plans customers due to overlapping interests [49] Question: What trends are seen with the Number Reputation Management product? - The product addresses consumer trust issues and is expected to have a global opportunity, driving customer wins [70]

Core Viewpoint - Twilio and RingCentral are leading players in the cloud communications industry, with distinct approaches and market positions, raising the question of which stock presents a better investment opportunity today [2]. Twilio Overview - Twilio has improved profitability, with Q4 2024 revenues increasing 11% year over year to $1.19 billion and achieving GAAP operating profitability for the first time, reflecting management's focus on cost discipline [3][6]. - The company offers AI-powered communication tools, such as Twilio Verify and Voice Intelligence, which enhance customer interactions and provide a competitive edge through an API-first model [4]. - Twilio's financial position is strong, with $2.38 billion in cash and marketable securities against $991 million in long-term debt, allowing for significant shareholder returns, including $2.3 billion in buybacks in 2024 [5]. - However, Twilio faces near-term challenges, with Q1 2025 revenue guidance of $1.13-$1.14 billion indicating a sequential decline and EPS forecasts falling short of expectations [6]. - The company's usage-based revenue model is vulnerable to economic downturns, with rising competition and pricing pressures in the cloud communications market [7]. RingCentral Overview - RingCentral is a leader in the UCaaS market, with Q4 2024 revenues reaching $615 million, an 8% year-over-year increase, supported by AI-driven product innovations [8][11]. - The introduction of AI Receptionist in February 2025 exemplifies RingCentral's commitment to AI-enhanced solutions, reinforcing its competitive position [9]. - Partnerships with major tech companies like Microsoft and Google enhance RingCentral's appeal, serving over 400,000 organizations and 7 million end-users globally [10]. - RingCentral operates on a subscription-based model, ensuring predictable revenues, with Q1 2025 revenue expectations of $607-$612 million, a 4-5% year-over-year increase [11]. - Despite a weaker liquidity position with $243 million in cash against $1.35 billion in long-term debt, RingCentral's strong cash flow generation of $403 million in free cash flow for 2024 allows effective debt management [12]. Financial Estimates and Valuation - The Zacks Consensus Estimate for Twilio's 2025 sales and EPS implies year-over-year growth of 7.7% and 15%, respectively, although EPS estimates have been trending downward [13]. - In contrast, RingCentral's 2025 sales and EPS estimates imply a year-over-year increase of 5.2% and 13.5%, with EPS estimates trending upward [15]. - RingCentral's forward sales multiple is 0.86X, below its median of 1.20X, while Twilio's forward earnings multiple is 2.35X, above its median of 2.79X, indicating a more attractive valuation for RingCentral [15]. Conclusion - Both companies have unique strengths and challenges, with RingCentral's subscription-based revenues and AI innovations positioning it well for sustainable growth, while Twilio's long-term potential remains promising despite near-term risks [17][18]. - RingCentral's attractive valuation and favorable estimate revisions make it a more compelling investment choice in the current market environment, with a Zacks Rank of 1 (Strong Buy) compared to Twilio's Rank of 3 (Hold) [18].