EverCommerce(US:EVCM)2022-11-12 10:28Financial Data and Key Metrics Changes - The company reported a year-over-year revenue growth of 23% for Q3 2022, with pro forma revenue growth normalizing for M&A effects at 13% [8][28] - Adjusted EBITDA for the quarter was $30.2 million, representing a margin of 19.1% [32] - Adjusted unlevered free cash flow for the quarter was $22 million, reflecting a 1.3% year-over-year growth and a margin of 13.9% [36] Business Line Data and Key Metrics Changes - Subscription and transaction fees accounted for $120.1 million, up 31% year-over-year, while marketing technology solutions generated $36.3 million, up 15% [28] - The total payments volume (TPV) grew 22% year-over-year, reaching an annualized TPV of approximately $10.5 billion [22] Market Data and Key Metrics Changes - The company experienced macroeconomic headwinds affecting its marketing service solutions, which represent approximately 23% of total revenue [16] - The strength of the U.S. dollar negatively impacted revenue by an estimated $200,000 in Q3 2022 [29] Company Strategy and Development Direction - The company is focused on balancing growth and profitability while prioritizing investments in areas that drive the most growth [18][44] - The Board of Directors authorized an increase in the share repurchase program to $100 million, reflecting confidence in the company's valuation and future growth potential [10][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the marketing service solutions but expressed confidence in the resilience of core vertical SaaS solutions and payment services [44][78] - The company expects 2023 revenue growth to align with current trends, assuming continued macroeconomic headwinds [19][62] Other Important Information - The company serves over 600,000 paying customers across various micro verticals, emphasizing the essential nature of its software solutions [14] - The company is committed to the digitization of the service economy, viewing it as a significant growth opportunity [10][87] Q&A Session Summary Question: Challenges in marketing services and impact on core business - Management explained that the core business remains essential for customers, and while marketing services are complementary, they do not significantly impact the core workflows [46][48] Question: Customer billing terms and cash flow timing - Management confirmed that there have been no requests for adjusted billing terms from customers, indicating stable cash flow expectations [49][50] Question: Customer behavior and product uptake - Management noted that while the percentage of customers using multiple products decreased slightly, the overall number of customers taking more than one solution increased by 30% year-over-year [51][52] Question: Reprioritizing spending and growth areas - Management highlighted that the core system of actions and home field service categories are performing well, while fitness-related solutions lag behind [54] Question: Lead generation business and internal controls - Management is diversifying the advertiser base and expanding efforts into less impacted categories to boost the lead generation business [59] Question: Guidance for 2023 revenue growth - Management indicated that 2023 revenue growth is expected to be in line with current organic growth rates, around 13% [61][62] Question: Net revenue retention and customer churn - Management reported that net revenue retention remains at approximately 100%, with no significant churn observed [65] Question: Impact of interest rates on guidance and capital allocation - Management discussed the fixed rate swap on $200 million of debt to mitigate interest rate exposure and emphasized a strong balance sheet [73][74] Question: Seasonality of marketing business - Management indicated that Q4 and early Q1 are typically lower periods for marketing services, while Q2 and Q3 are higher [81] Question: Changes in customer acquisition costs - Management confirmed no material changes in customer acquisition costs, maintaining stability in advertising channels [82][83]