Thank you for standing by and welcome to EverCommerce Fiscal Year 2021 Fourth Quarter Earnings Call. My name is Carmen and I will be your operator for today. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. As a reminder this conference call is being recorded today Monday, March 14, 2022. And now, I would like to turn the conference over to Brad Korch, Senior Vice President and Head of Investor Relations for EverCommerce. Please go ahead.

Good afternoon and thank you for joining. Today's call will be led by Eric Remer, EverCommerce's Chairman and Chief Executive Officer; and Marc Thompson, EverCommerce's Chief Financial Officer. Joining them for the Q&A portion of the call is EverCommerce's President, Matt Feierstein. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months and year ended December 31st, 2021. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce website www.evercommerce.com. The slide presentation and earnings release are also directly available on the site. Please turn to page two of our earnings call presentation while I review our Safe Harbor statement. Statements made on this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and the uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements except as required by law. We will also refer to certain non-GAAP financial measures to provide additional information to you, our investors. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation. I will now turn the presentation over to our CEO, Eric Remer.

Thank you, Brad. I'm excited to share with you that EverCommerce reported excellent fourth quarter results that capped a great year for the company and exceeded revenue and EBITDA guidance. EverCommerce is delivering on its strategy to be a leading provider of service commerce solutions simplifying and powering the lives of business owners across the globe. On today's call, I will summarize our investment business, highlight fourth quarter results, and discuss our key priorities for 2022 before turning our call over to Marc to dive deeper into our financials. EverCommerce provides tailored end-to-end SaaS solutions that support the highly diverse workflows and customer interactions of professionals and home services, health services, and fitness and wellness services, need to automate manual processes, generate new business, and create more loyal customers. With a diverse set of over 600,000 global customers, EverCommerce is leading the digital transformation of the service economy. EverCommerce generates nearly $0.5 billion in annual revenue. Further, we are among an elite group of growth-focused software companies that balance durable growth with sustainable profitability. We grew revenue 45% in 2021, which is inclusive of 21% pro forma organic growth. We did this while maintaining 22% adjusted EBITDA margins. Supporting this growth and profitability are strong customer economics illustrated through a high LTV:CAC ratio. We have a massive market opportunity with one of the largest addressable markets in the software and technology. There are over 400 billion SMBs and over a $1 trillion market opportunity globally. In the US alone with a vast majority of our businesses, there is an over $0.5 trillion opportunity and more than 30 million businesses. Services are the backbone of the US economy accounting for 77% of US GDP and small businesses employ the majority of service professionals. By focusing and serving the vast community of…

Thanks, Eric. Today I'll review our fourth quarter fiscal 2021 results in detail and provide our outlook for the first quarter and full year of fiscal 2022. As Eric said, we're very pleased with our fourth quarter results, having exceeded the high end of our guidance range for both revenue and adjusted EBITDA, underscoring a really strong finish to the year and continuing momentum in our business. Total revenue in the fourth quarter was $135.6 million up 47% from the prior year period and above the high end of our original guidance. Within total revenue, subscription and transaction fees were $99.7 million up 55% from the prior year period and marketing technology solutions were $29.3 million up 24% from the prior year period. Q4 includes approximately $4.5 million of revenue from DrChrono, which closed on November 18. We manage the business for sustainable organic growth and utilize strategic acquisitions to augment this growth. As a result, we believe it's important for investors to evaluate our business growth on a pro forma basis, which is how we measure and manage the business internally. We calculate our pro forma revenue growth, as though all acquisitions closed as of the end of the latest period were closed as of the first day of the prior year period, including before the time we completed the acquisition. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business. We are very pleased with our pro forma growth rate, which was 24% year-over-year in the fourth quarter and 21% for the full year. We experienced good growth across all three of our core verticals and our various products. As Eric noted, we drove this growth while maintaining solid profitability. Fourth quarter adjusted EBITDA was $29.3 million, representing a…

Thank you. [Operator Instructions] We have a question from the line of Kirk Materne with Evercore ISI. Your line is open.

Yeah, thanks very much. Eric, can you just give us some sense of kind of what you're seeing out in the environment. These days you guys, obviously, have a huge base of small business customers. And I think there's just a lot of questions about how things like inflation are playing into sort of demand for their customers. And just how are you guys thinking about that as we head into 2022 knowing this is still a big opportunity to sort of add a lot of new customers and take ARPU up as well.

Well, Kirk, thanks for the question. I appreciate that. And we think about that (ph) as you can imagine. And as we look at our core customers, we are really in kind of essential services. If you think of the categories we serve from our home services, the customers that we're serving, most of them are doing break it, fix it, that kind of core plumbing electrical HVAC, but we don't see much impact on whether inflation goes up or things of that nature. Similar with our health services, you're dealing with core medical and things that are going to continue regardless of some bumps in the economy. And the last category, the fitness and wellness, again because we're dealing on that smaller side of things, we have customers like Anytime Fitness. And at $10 a month, we don't see our businesses being impacted greatly. It's really smaller cost services that we -- as we look at our customer base, ultimately not to be affected. And just to take a step back and you bring up a really good question as we look at the overall world, with over 600,000 plus customers, not just in three verticals but really in almost 35 verticals, five business lines and multiple revenue streams, things are going to happen across the ecosystem as you can imagine as we saw within COVID, but we feel really insulated against whatever may come our way.

That's great. And then just one really quick follow-up for you. Obviously, we've seen valuations in the public market get hammered over the last couple of months or a few months. How does that impact if at all sort of your strategy around M&A, meaning are you seeing valuations change in the private market? How do you -- does that impact anything? I realize you guys have a very long-term view, but just curious if it's impacting your discussions in any way. Thanks.

Yeah. No another good question. We look at -- we're constantly tracking the marketplace. We have a large pipeline that we're constantly interacting with. And I do think right now you bring up a great point. There is a disconnection between public market valuations and private market valuations. So, it allows us to be patient as we kind of kicked off in the call with organic growth, the core focus of the business, and our belief that we'll maintain that for years to come. It gives us the discipline -- the ability to be disciplined and make sure what we find in the marketplace makes sense for us both now and the future. So, I think over the long-term, we'll continue to look at great opportunities. But again, they need to make sense for the organization, and we'll focus on the core economics of the business until we see the M&A markets and the privates come back to us.

Thank you.

Your next question comes from Brad Reback with Stifel. Your line is open.

Great, thanks very much. Eric, as we think about total payment volume through the system, is there an opportunity for that to grow meaningfully faster than pro forma revenue growth as you drive attach?

Hey, Brad. Thank you for the question. I'll let Matt take that one.

Yeah. I think again, we're happy with that 21% year-over-year growth of annualized TPV to $9.1 billion. You said that we’re meaningful. I certainly think we see the opportunity to continue to push the gas on this embedded TPV payments opportunity. 33% of our applicable software systems of action customers have attached to payments today. So, as you've heard us say, we're still really in the early innings as we're able to meaningfully drive that attach rate and the utilization of payments, I definitely think we believe we can continue to drive that at 20%-plus and beyond. So, the opportunity is there. Some of those bases are penetrated already, so they aren't going to be growing at the same base. But as we get new opportunities like the DrChrono opportunity, like the Timely opportunity that -- from our recent acquisitions over the last year, those represent faster growers that can help the TPV grow quicker.

That’s great. Thanks very much.

Okay.

Your next question comes from Sterling Auty with JPMorgan. Your line is open.

Yeah. Thanks. Hi, guys. I want to go back to an earlier line of question. I think it was maybe Kirk that was asking it kind of on the macro side. But I ask it this way, we're looking at the number of new businesses being formed in the US declining year-over-year still probably above pre-pandemic rates, but help investors understand when you look at your companies, your brands getting new customers, is business formation an important part of it, or are you picking up businesses a little bit later than that early?

Thanks, Sterling. Great to talk to you. We're a little bit after that. So, I think very, very early that new business that is just getting LLC or C-Corp. We're going to most likely be on a little bit the next stage of that growth. And you think about the wind behind the sales that we're seeing in the categories in home service, that TAM grew 17% last year. Health services is just getting its feedback from a couple year pandemic. And as you know in the fitness and wellness, that was massively hit in 2020 and started to respond into 2021. And so, in the core verticals that we are serving, we've both seen both acceleration and then getting back to kind of business as usual. So that early, early part of that business formation won't affect us and we haven't seen effect on our business at this point.

All right. Great. And then one follow-up. When thinking about the margin improvement, you talked about some of the integrations and integrating some of the acquisition et cetera. Can you maybe go a little bit deeper in terms of what are some of the things that you're doing on maybe not like DrChrono, but maybe the last cohort of acquisitions? What are some of the steps that you're taking? What kind of benefits are you seeing at the EBITDA line?

Yeah. Hey, Sterling, it's Marc. It's a great question. And we -- when we look forward over the longer term, we can see a lot of levers to really drive operating leverage in the business. And it's really kind of throughout the operational motion of the business. But the centralized operating platform starts there really, right? I mean, by virtue of being able to onboard solutions and really drive efficiency across that complete base, whether it be business operations, growth engagement right on through the traditional G&A functions, we're going to see consistent improvement there, particularly beyond 2022, as we get over the hump of a full year of public company infrastructure in place and as we continue to make investments in scalable operations to really drive growth well beyond where we are today. But one good example of that is brand consolidation and I use that word actually in two ways. In the short term, what that has meant to us, we've acquired 52 solutions. We are operating roughly half of that in terms of solution or operational P&Ls internally. So that allows us to combine different organizations within the go-to-market framework and certainly leverage that centralized platform over a smaller number of businesses. So there's some real efficiency glean there. And then over the very long term, one of the things I think you're going to start to see and we've talked about this on prior calls is actual brand consolidation as we think about starting to lean into things like our EverPro brand going forward EverHealth, EverWell and so forth. So we are in the early innings we believe of really driving operating leverage throughout the sort of stack if you will. But this will be a big year of kind of continuing to get over that hump and we really look forward to driving leverage beyond.

Make sense. Thank you.

Your next question comes from Matt Hedberg with RBC Capital Markets. Your line is open.

Dan Bergstrom from Matt Hedberg. Thanks for taking our questions. So your organic growth for the year 21% slightly above that targeted 15% to 20% range. Really great to see that. Maybe what were some of the keys for the year that led you to outperform that range?

Yeah. Thanks for your question, Matt. Again, when you go back to our organic growth, we consistently go back to really two things. There's new customer acquisition, as you know incredibly large focus of ours. We're excited about our ability to continue to acquire customers at the rate that we had previously and as you could see by our customer growth over the course of the year 20% year-over-year growth. So getting those customers into the ecosystem really think about it as growth lever one. And growth lever two, we've consistently gone back to that massive embedded opportunity with that 600,000-plus now customer base. And when you think about that opportunity, we really think about upsell and cross-sell. And again, you've heard us we're in the early innings of that cross-sell, upsell expansion has been a rhythm that we've continued to perfect further and further as we brought the ecosystem together. So that embedded customer base opportunity along with new customer acquisitions really continue to be the drivers of that organic growth.

That's great. And then on that cross-sell, you provided us with the 55,000 customer number in the press release -- or the press release in the presentation of customers using more than one solution. Is that something that we should see from you maybe quarterly annually going forward? And then is there a comparison to last year or maybe a way to think about customers using more than one solution now versus a year ago?

Yeah. I think we're -- that is something we are absolutely tracking from a very focused standpoint I think you could expect to see us update that at least annually from that perspective. I think you had a second component to your question...

Matt, I think the second component was I think we said in the script where we talked earlier that was a growth of 25% year-over-year.

Great. Thanks.

And your next question comes from Bhavin Shah with Deutsche Bank. Your line is open.

Great. Thanks for taking my question. Just continuing on that line of question on pro forma revenue growth, which remains aggressive. Can you just maybe dive into what you're seeing from a vertical perspective as you think about the – there to be different adverts in terms of headwinds or even more likely tailwinds that you're seeing on these three core verticals?

So the question was – I just want to make sure I get the question right Bhavin and it's Marc and thanks for the question. So you're asking about vertical breakdown. Is that what you're asking? You broke up a little bit.

Yes, just qualitatively what you're seeing between EverPro EverHealth and EverWell, whether it's puts and takes. I know during COVID obviously, EverWell had some starts and stops but just any initial insight would be great?

Yes. If you look at the three verticals and I touched on this a little earlier we have – EverPro has really been kind of – it's the majority of our business just under 60% of our business and it's really been consistent all through – even through 2020 and that kind of continued its growth in 2021. The TAM continues to grow. You think, the homeowners continue to invest in their homes. Homeownership continues to grow. And just as more break-and-fix it that exists and we believe that market will continue to maintain itself. When you look at the health services, we're in a lot of – it's a variety but we're in a lot of health specialty medical. Specialty medical really shut down in early 2020, started to come back throughout 2020 and into 2021. And we're seeing outside of a few headwinds in various pockets of the nation. In 2021, really began its kind of pre-COVID levels and we feel pretty good about its consistency. And the last one was in fitness and wellness, which was the biggest hit in 2020. By the end of 2021 outside of again a little – some kind of headwinds in certain pockets and geographies, specifically overseas we have some facilities in both UK, Australia, New Zealand, where they shut down on various parts of the country for COVID. For the most part you're seeing that fully rebound. I think Planet Fitness came out and said that their gyms now at about a 97% pre-COVID levels. And so we're kind of getting back to pre-COVID levels and we expect that to continue.

Thanks, Eric. And just a quick follow-up. Just when you talked earlier about leveraging the centralized platform, you guys launched EverConnect late last year. Can you maybe talk about what you're seeing thus far as you simplified the product portfolio and you drive better branding what are you able to see from a cross-sell perspective and what you've seen thus far in 2022?

Yes, it's a great question and thanks for that Bhavin. The Ever brands, that is obviously a core thesis of ours that the underlying consolidations of our solutions and the utilization of those Ever brands really from – and bringing together the service experiences with them will enable a better customer experience, more effective cross-sell opportunities and a more efficient go-to-market expansion in those markets that we serve. We announced EverConnect in Q4 still in the very, very early innings but have gotten some nice early wins of that consolidated brand and operational approach. I think we've discussed with you all in the past that a little bit further along going to market with our EverHealth brand. And again also seeing some nice wins from a new customer acquisition and an early cross-sell from their early cross an easier early cross-sell integration of our integrated clearinghouse of our payments and our patient engagement solutions. So again, early innings but we're seeing the evidence of nice wins on that strategy thus far.

Super helpful. Thanks for taking my question.

Your next question comes from Samad Samana with Jefferies. Your line is open.

Hi, good afternoon. Thanks for taking my question. So maybe one in terms of as your SMB customers kind of respond to or react to let's call it a slightly different working environment than where we were prior to the pandemic. Are there any new products or features that they're asking you for that we should think about, or how do you think about your product development road map to maybe capitalize on this different environment for SMBs that they're currently having to deal with?

I'll start and Matt can kick off and I'll just give you – thanks for the question and I'll give you kind of a couple of scenarios. And obviously, we're developing products on a daily basis for a variety of different needs. But you're seeing more and more needs that it kind of came out of what we needed in COVID and how they're going to expand. I'll give you a good example of that. During COVID in our health service in our EverHealth group, we developed a virtual waiting room. Nobody wanted to sit in the waiting room with someone next who got COVID. But you know who else we don't want to sit next to? Someone who's got the flu. So, things like that that have been kind of developed for certain scenarios have been actually kind of expanded, kind of the post-COVID world and we think that's going to continue. Matt, do you want to give a couple of examples as well?

Yes. I think Eric hit on that. I think the trends that we saw in COVID around opportunities are ones that we continue to invest in. I think some of what you're talking about is, also just core to our thesis of as our current situation and current headwinds that our businesses are facing, our software our core software only becomes more and more important to our businesses. It is critical from an efficiency standpoint to how they run their businesses as they have tightness in supply chain or in labor. Our software only becomes more and more important. So we're continuing to invest in upgrades in those existing products. We are focused on unlocking more wallet share through product integrations like we've talked about from payments or customer engagement or just continued incremental feature development that's going to allow us to open up new segments in the micro verticals we're in and drive further new customer acquisitions. So I wouldn't say there's a massive departure now. I think Eric spoke to some of the innovations that we have undertook during COVID. But as we look out and see what headwinds these businesses are facing today; we think that's very central to the core thesis of our product.

Great. And Marc maybe just a financial question for you. Just when I think about the – and I appreciate the color around the additional expenses for operating as a public company. And I know you gave the EBITDA guidance. But how should we think about maybe the traditional relationship between the EBITDA conversion to free cash flow? Should that be similar to prior years, or is there anything we need to know from like a working capital timing perspective that may change that? Just when we're thinking about cash flow in 2022, is it fair to assume kind of normal conversion?

Yes. Thanks Samad. Nothing's really changed there. In fact, I think the investor deck that we put together kind of breaks out the two cash flow metrics for the first time. And I think that the adjusted unlevered free cash flow really highlights that. I think when you do the math on that you'll see conversion that in line with what we've talked about previously. So really no change there and don't expect that going forward.

Okay. Great. Thanks very much.

Your next question comes from Ryan MacWilliams with Barclays. Your line is open.

Thanks for taking the question. Marc would you mind refreshing us on some of the seasonality you may have seen in the quarter? It looks like for the fourth quarter it's a stronger quarter for free cash flow and then a weaker quarter on the revenue side for marketing technology solutions just provide some guidance there? Thanks.

Yes. So on the cash flow piece working capital swings towards the end of the year, you saw the same thing in the fourth quarter of last year. So that's really just working capital fluctuations there that tend to be end of year type stuff. I think more probably -- more importantly just the cadence of the business and seasonality. As we've talked about before marketing technology, firstly, it's pretty heavily exposed to our EverPro verticals so across the home services category. So you do see some seasonality there. And that's really what drives Q4 in sort of a softer Q4 and Q1. The middle quarters Q2 and Q3 are certainly seasonally up there on that line.

Perfect. And then how are you thinking about improving net retention from here? It was nice to see that tick up in the quarter. And I know you don't guide to that metric but like are you planning for incremental contribution from existing customers and improving that retention in this full year '22 guidance? Thanks.

Yes. That's a great question and I appreciate that Ryan. We're certainly happy with the continued improvement. We see that continue to expand through -- two main means really the -- by the upsell of the consumption of the additional value-added features that our customers are already utilizing, as well as through that purchase and consumption of that of those additional products that really cross-sell where we can provide that necessary and really desired integrated end-to-end customer experience that's going to support those cross-sell and expansion opportunities.

Thanks for the color.

Your next question comes from Alex Sklar with Raymond James. Your line is open.

I want to follow up on your answer to that last question. You've got about 15% of your base taking more than one product. Can you just talk about some of the initiatives you're working on to drive that cross-sell higher?

Yes absolutely, obviously you've heard us talk about payments. Payments, is critical. And again, it all really does start with the system of action driving that cross-sell. So we are highly focused on continuing to really build out those systems of action broaden the circumference of features that they have, specifically through integrating and completing those end-to-end experiences that our customers desire. So, if that system of action doesn't have payments, we're going to add payments if that workflow opportunity makes sense, we're going to add our customer engagement solutions and we have various where those workflow opportunities make sense. And we're going to look for kind of adjacent I'll call it, light integration of marketing technology solutions into those systems of actions as well. As you've heard us talk about, I believe it was last quarter we did bring on Stone de Souza our COO that really his mantra thinking about organic growth through the lens of customer expansion and cross-sell and up-sell. So, lots of opportunities and certainly a very, very high focus throughout the organization and leadership on that.

Got it. That's helpful color. And then, how should we think about -- so those customers that cohort of customers that are taking multiple products, how does the economics look from those in terms of either NRR or lifetime value? I'm just curious, kind of, what we should expect as you do that get to a higher level of cross-sell. Thank you.

Yeah. It's still early on from a cohort basis. So I think we'll be able to provide you more metrics as we go on there, from a lifetime value perspective and from an NRR perspective. Obviously from an LTV standpoint this is all about stickiness. So as we further fill out the customer value chain, our expectation is that that will continue to be stickier and stickier that customer drive their lifetime longer. That obviously has a positive increase on the NRR. But obviously we're also expanding their, spend with us. That expansion of spend has really nice positive impact on our NRR, and will also continue to be a driver of how we see that improve into the future. So they really do both go together from a metric growth standpoint.

Okay. Thank you.

And your next question comes from Pat Walravens with JMP Securities. Your line is open.

Oh, great. Thank you. And let me add my congratulations. So my question number one is did My PT Hub achieve their earn-out?

Yeah. I'm sorry. I'm sorry. Sorry it did not. I apologize. I'm sorry.

What was going on with that?

They didn't meet their objectives to hit the earn-out Pat.

The business didn't perform to the expectations that in the earn-out which were stretched goals. So I think that's probably the right way to think about it.

And Pat just to add to that, I mean, of the 50 deals we've done, I think, we've had three earn-outs and that was one most recent and we rarely do them it just creates some misalignment in general. And so the vast majority of the dollars expected to pay are usually on an upfront basis. And if there is any earn-out it's the bridge a gap and there's going to be a pretty hefty bridge to kind of cover. So we're happy to pay them out when they get them, but we really kind of put them in play. And it's not something...

I was thinking of my next question. So this is not a big part of the mechanism, right?

No not at all. We really just like candidly the operational lack of alignment. So I really try to avoid them. When we onboard these solutions it's really critical that we bring them on, and from day one start to operate to the plan that we put in place. So if we have an earn-out structure it does create sort of disincentives if you will at certain parts of that operational motion. So we really would prefer have everybody aligned operating to the plan we put in place, during diligence and take that up to day one of close.

All right, great. And then, Marc just sort of a quick follow-up for you, as you look at the balance sheet right now are there any sort of key points you would make for investors? And are there any places where you can optimize things?

It's a great question Pat. I mean, first of all, from a cap structure standpoint, as I mentioned in my opening remarks, I mean, we feel like the balance sheet is quite strong. We're operating right within the financial policy, we've set out continue to generate cash feel good about that. From a working capital standpoint, I mean, you know, the business we don't create a lot of deferred revenue. This is mostly monthly set. So that also positively impacts AR. You can always turn the screws on things like collections and optimize that. I'll be very candid and say, we're operating at a level that I think is accessible, but we are folks that are very interested in continuous improvement. And actually have teams focused on that kind of stuff as well day in and day out.

Great. Thank you both.

And our next question comes from DJ Hynes with Canaccord. Your line is open.

Hey, guys. Thanks for taking our questions. Eric where do you think you are in terms of customer awareness with respect to all the horizontal tech solutions that you have in the portfolio, right? I mean, we're at 9% of customers using more than one product. There's lots of wood to chop there. How do you get people aware that you're selling new services?

Yes. I mean, again, I think, we're in the early innings. Every different solution is a little bit different. The longer the solutions in part of the ecosystem, the more aware they are of it. And I think what ends up happen is, as you onboard a solution, you start -- you integrate for the new customers to start onboard much quicker so you get a real quick -- you start getting an uptick on new customer acquisition. At the same time, you're going back to the existing base and you're selling through to that base as well. So it is a heavy -- one of the benefits and we're able to kind of acquire customers very cost effectively, which gives us great LTV to CAC, 85% of our new customer acquisition is they buy self-serve, they onboard self-serve and they use self-serve that's amazing. It provides us opportunities to kind of get people on board quickly on upsell, sell-through, a lot of in-product marketing in the flow of the product to make it, where it makes sense. And so when you're doing things like that it just has to be part of that ecosystem, part of that flow. And so it's again early innings and it takes time to fully penetrate that. But we've been doing this for quite some time. There's been historical penetrations we've had at PaySimple, we've integrated into third parties, and we've got up to 90-plus percent on payment sell-through. So, we know we've seen that kind of progress and it just takes time to kind of fully penetrate. Anything to add there, Matt?

No, I think, the most important part at the end is that really that -- it's that integration into that core system of action software that is that driver. Without that getting them aware of multiple products is certainly difficult. So, we've certainly made the most progress from a payment standpoint, and as we have brought more solutions from our customer engagement, and where possible to integrate marketing technology. Those solutions into the ecosystem, you will see our progress continue to quicken over time. But to Eric's point it takes time and intentionality around how you package and promote the products.

Yes. Okay. That's helpful. And then Marc a follow-up for you. If for whatever reason you had to put a pause on M&A activity for a year or so, what would happen to the financial model?

Not much. I mean, honestly, our whole financial model, right? We don't include M&A in the guidance that we provided. So everything we're doing is really all about driving the organic growth initiatives and the bottom line profitability objectives that we've set. We -- if we were to not do M&A, we would -- a small team of folks who are focused on, I mean, small team, they would be doing actually a lot of different strategic things inside, because that is not their only job. So they do other things with respect to channel development and things like that. So to be candid at the scale we're at if we were to not do that, I don't think it would really impact the financial model at all going forward the way we've advertised those.

And I would just add to that. I think the kind of core operations of the team would probably tell you if we didn't do M&A for whatever reason for a period of time if the economics didn't make sense for business, you would have more resources focused on the kind of core solutions we have today, and you would probably see additional both growth and operating leverage in the core business. So I think the I think M&A is going to continue to be complementary continue to be an opportunity that we'll see, but we're very confident in the business we're on today that will not only maintain its existing growth, but I think there would be opportunities to potentially accelerate as well.

Perfect. Thank you guys for the comments.

Thank you. And your last question comes from Clarke Jeffries with Piper Sandler. Your line is open.

Hello. Thank you for taking the question. First is kind of multi-part for Marc. Just to get a sense on sales and marketing exiting here growing faster than revenue, can you remind us really what the main categories of spend in sales and marketing are today? And maybe what the trend line might be for that line item over the next 12 months? Is it possible that it more closely converge with revenue growth and sort of what might be the spend level that's essential for the growth plan in the guidance here?

Thanks, Clarke and it's a good question. And I think, you're thinking about it going forward correctly. I think, look, we've been exceeding the growth objectives and we've been investing in sales and marketing to do that. We have a giant market opportunity ahead of us and we're executing well and we want to continue to hit the gas pedal. I think, the comparison to '20, you always have to remember that '20 was the year we throttled down obviously right with COVID, hitting us really in March. And then Q2, one of the beauties of the digital marketing model that we have is that we can throttle down and we did. So I think the comparison is a little tough when you see that kind of growth. I think, we started to see growth return in the second half of '20 and we started to invest in that. So, as you look at the sales and marketing line as a percent of revenue in the second half, you'll start to see it move up and it's been doing that continuously forward. But I think the way you're thinking about it going forward is a pretty good proxy.

Great. And then maybe an additional point of color, in terms of -- is there a way you could contextualize, what your hiring needs are for the next year to hit the growth plan? A lot of companies are working through labor shortages and retaining talent, anything you'd comment on your strategy and the sort of hiring needs for the next year?

Yes. I mean from a contextualization standpoint, again, we understand what we need. It's built into our plan and ultimately the guidance like all companies. Obviously, hiring remains extremely competitive. And to date in 2022 is probably running a little bit behind plan. We don't expect in any way for this to impact our growth objectives. And over the last year just for a little bit more color, we've really continued to advance the executional capabilities of our people experience organization and really what that people platform is. We're focused on critical scale initiatives and talent acquisition. That includes both, recruiting and onboarding, employee engagement and development and employee retention to really help us combat those current conditions. So, we're certainly aware of what it is. It's built into our plan and we're executing against that plan today.

Appreciate it. Thank you, very much.

Thank you. And this concludes our Q&A session. I will turn the call back to Eric Remer, our CEO for final remarks.

Well, thank you all for joining us today. I also want to thank the entire EverCommerce global team for a really great fourth quarter as well as an amazing 2021. The collective energy effort and focus of the team makes everything we do happen. As we enable the digitization of the service economy, as a leading service commerce platform in the world, we will continue to focus on simplifying and empowering the lives of business owners, by providing them the best software and solutions to make their businesses more successful. Again, thanks so much for joining today.

And with that, ladies and gentlemen, we thank you for your participation in today's program. You may now disconnect.