Thank you for standing by and welcome to EverCommerce this fiscal year, 2022, first-quarter earnings call. My name is Josh 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. Cascade question during the session, you'll need to press star one on your telephone. As a reminder, this conference call is being recorded today. Monday, May 9, 2022. If you require any further assistance, please press star or zero and I would now like to turn the conference over to Brad Korch, SVP and Head Investor Relations for EverCommerce. Please go ahead.

Good afternoon and thank you for joining. Today's call will be led by Eric Remer, EverCommerce Chairman and Chief Executive Officer, and Marc Thompson, EverCommerce Chief Financial Officer, joining them for the Q&A portion of the call is EverCommerce President, Matt Feierstein. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended March 31, 2022, for a link to the live or replay webcast please visit the Investor Relations section of the EverCommerce website, www. EverCommerce.com to slide presentation and earnings release are also directly available on the site. Please turn to Page 2 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 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. Our 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. EverCommerce’s first-quarter results were very strong. Our reported revenue and adjusted EBITDA results both exceeded the top end of the guidance ranges. While we also maintained pro - forma organic growth above the high end of our 15% to 20% range and continue to generate healthy cash flow. These results are underpinned by our massive opportunity to drive digitization of the service economy, which is still in the early innings and provides us a strong tailwind to fuel growth for years to come. On today's call I'll highlight, first-quarter results. Reiterate our investment thesis, and discuss our key customer trends in metrics before turning the call over to Marc to dive deeper into our financials. Last quarter, we highlighted our long-term strategy of balancing growth with profitability and our strong first-quarter 2022 results exemplified this. Exceeded the top. And of our guidance ranges for both revenue and adjusted EBITDA and reported revenue growth was 37% normalizing for M&A proforma organic revenue growth exceeded 20% Our adjusted EBITDA margin was 60% for the seasonally low first-quarter and includes front-end loaded investments in scalable operations and public company infrastructure, as well as a headwind from our doctor Kronos acquisition, which is still transitioning to proper operations this year. Our customer metrics accelerated the quarter as well. Total payment volume or TPV, grew 26% year-over-year. And our annualized net revenue retention expanded to above a 100%. As a quick reminder, EverCommerce provides tailored end-to-end SaaS solutions that support the highly diverse workflows and customer interactions that professionals and home services, health services, and fitness and wellness services used to automate manual processes, generate new business, and create more loyal customers. EverCommerce is leading the digital transformation of the service economy with a mission to simplifying a power the lives of…

Thanks, Eric. Today I'll review our first quarter of fiscal 2022 results in detail, provide our outlook for the second quarter, and also update our full-year fiscal 2022 guidance. As Eric noted, our first quarter results for quite strong, having exceeded the high-end of our guidance range for both revenue and adjusted EBITDA. Total revenue in the quarter was $143.6 million up 37% from the prior year period and above the high-end of our original guidance. Within total revenue, subscription and transaction fees were $108 million, up 44% from the prior-year period and marketing technology solutions were $29.9 million up 18% from the prior-year period. We managed the business for sustainable organic growth and selectively utilized 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 manage and measure the business internally. We calculate our pro forma revenue growth as though all acquisitions closed as of the end of the latest period we closed as of the first day of the prior-year period, including before the time we completed the acquisition. We believe the proforma growth rate provides the best insight into the underlying growth dynamics of our business. We're very pleased that our pro forma growth rate exceeded 20% year-over-year in the first quarter and we experienced good growth across all three of our core verticals. Consistent with our discussion last quarter, we drove this growth while maintaining solid profitability. First Quarter adjusted EBITDA was $23 million, representing a 16% margin. This is above the high end of our one guidance, having grown adjusted EBITDA, 8% year-over-year The year-over-year, and sequential change in adjusted EBITDA margin is reflective of our investments in growth and scalable operations. The impact of public…

Thank you. [Operator Instructions]. Our first question comes from Matt Hedberg with RBC Capital. You may proceed with your question.

Hey. Thanks for taking my questions. Congrats on the results. Maybe Eric, for you, there's a lot of questions obviously about the macro environment and you wouldn't necessarily see it in your results, your guidance, but just could you talk a little bit more about sort of your broad view of the health. The service economy. And maybe as we stand now and your thoughts for the rest of the year.

Yeah. Thanks, Matt. I appreciate the question and I think Marc touched upon a little bit. If you think about the service economy, specifically the service aspect of that college service economy, so services could be goods or services that e-com prepared in that category. And the service aspect, especially categories that we focus on, which is really our kind of our tight view of the world, we see continued growth specifically in that home service category, health services, really non-cyclical categories that we focus on, that we focused on for several years. We have not seen any pushback to date. And obviously, as mentioned, it's not in our Q2 guidance and we expect specifically with diversification of the customers we have and the categories that we cover, we don't see any headwind against those core categories for the rest of the year.

That's great. Thank you for that, Eric. And then maybe as a follow-up. Thanks for the comment on the $9.5 billion of TPV, and we've always thought that this huge opportunity to sell payments back into the base. Is there another way to think about how penetrated it is in your overall customer base today? Maybe within those three verticals even, but just a little bit more granularity on how early we are in the customer -- the penetration in your base.

Yeah. Thanks for the question, Matt. You've heard us before and I still think we feel like we're really in the early innings of the opportunity. When you look at our system of action software customer basis, on average that's about -- we have about 34% adoption. But when you look at how we project out the overall TPV, we got a nine -- we got about annualized $9.5 billion that we just said in Q1. We look at that opportunity as north of $80 billion. So from a volume standpoint, the penetration really lags that customer adoption, and that's just all about getting -- continuing to drive those customers who have integrated payments to further use the workflows that we've created to create incremental workflows that drive more of their wallet share. So again, still really early to -- very mid innings there. Lot of opportunity and runway left.

Great to hear. Yeah, super-exciting for that opportunity into that $80 billion of bigger opportunities. Thanks a lot, guys. Well done.

Thanks, Matt.

Thank you. Our next question comes from Ryan MacWilliams with Barclays. You may proceed with your question.

Hi, guys. Thanks for taking the question. So the 60,000 customers now utilizing more than one solution, this seems like a strong step-up versus the 55,000 last quarter. Any particular products changes or changes to your sales motion that contributed to this growth in multi-product customers in the quarter? Thanks.

It's a great question, Ryan. Thanks again, this is Matt. Again, I want to hit on one part. We continue to think about optimizing our marketing and sales motion. And really that product packaging to drive the new adoption of those embedded solutions. Whether that's payments, obviously where we've had the most material success or customer experience solutions where we're following along quite nicely. And then it's really just deepening the integration into those system of action about software as those workflow capabilities, whether they'd be payments or customer experience solutions. But further, we can deepen those integrations into those system of action business management solutions. But that are uptake that we're going to get. So it's really the combination of those two factors driving it.

Who Said that? And then just how is Dr. Cronto performing versus your expectations from a revenue perspective at this point, like love to hear about how it contributed to the quarter. And just on the modeling gross margin side, I guess how should we think about EverCommerce moving past some of these front-end loaded costs. Just as we think about the rest of this year. Thanks.

Thanks, Ryan. I'll take the first one. Marc will kind of finish up in the second. The Dr. Cronto is operating at plan. We're kind of road along where we expect it to be and we're kind of continued to be excited about the prospects up, the growth of the business.

So I think Brian and the answer to your second question, I think your next question was around growth margin or was it EBITDA margin? Was it both?

That's correct. growth margin.

Okay. So gross margin, you see it that they are actually -- DrChrono is the primary contributor to that. Their mix of revenue is more skewed towards RCM. So that does affect the overall gross margin. As you know, the RCM Solutions are a little lower gross margin than the SAT Solution. So that's a big culprit in the change in gross margin.

Appreciate the color. Thanks, guys.

Okay. Next question comes from Kirk Materne with Evercore. You may proceed with your question.

Yeah. Thanks very much. Eric, why don't you just talk about your go-to motion -- market motion. And does anything change for you or do you change I guess the products you might be strategizing around or start pushing out in a different way if we go into our cession meetings? The customer marketing technologies become something you push harder than payments? I was just curious as you guys see this economic environment, is there anything changes on the go-to-market side?

At this point its really acceleration of business as usual, I'll start, I'll let Matt kind of chime in, where led off the but if you think about the business, we see the several times, but 85% of our new customer acquisition is self-serve. So it's online marketing and people are self-serving and on the buy, self-serve it onboarding. And there's self-serve serving utilizing a solution. We've gotten really good at getting in front of customers when they're looking for solution. The biggest thing that Matt touched upon earlier is that the motion that we've really been pushing is embedding more of those solutions as part of that process. The upsell cross-sell motion becomes more of a natural process for the customers that have already taken the product. That is, our current workflows as we're sitting here today. And that's going to be accentuated and accelerated over the coming years. Any type of recessionary macroeconomic won't really pushback against that of anything. Will accelerate more of that because you get more embedded a solution, the more utilization. The higher ARPU and higher retention.

Yes, the only thing I'll add to that Kirk really when you think of it from a product standpoint, we really do think of that core system of action as the entry way. That is where we will embed those horizon solutions to amplify and create more end-to-end workflows. But when you think about from an efficiency standpoint all of the efficiency from a customer standpoint which is still necessary specifically during recessionary time is really driven through that core system of action will take customers. However, we're going to meet them where -- however they come to us so they come to us for marketing technology we will take them, but we truly think the tip of the [Indiscernible] is still absolutely the core system of action business management software.

That's really helpful. And then I assume it might be a little bit early, but Eric here or Marc, I was wondering if anything's changed on the discussions on pricing around M&A targets for you all. Obviously, valuations are coming under some pressure and I assume the private market will be feeling that soon if not already. I was just curious if that changes your M&A pipeline or anything has changed on that front for you all in terms of more opportunities maybe coming faster.

Yeah, it's a great question. And as we discussed last quarter, part of where we are today, we're in the position where with our -- if we buy another company, our focus is continuing to grow at that 15% to 20% range organically for years to come. And it provides us the ability to be very disciplined and making sure the M&A opportunities that we want to actually get on are going to be accretive to the business. And we still think today, although there is a very large pipeline of opportunities that we're tracking, there's still a little bit of a disconnect between the public and private markets. And I think to your point, I think we'll start seeing the private markets hopefully becoming a little bit and provide more opportunity. But in the current moment, we think the dislocation of prices is still a little bit large and we're going to remain disciplined looking for opportunities that we think are accretive to the business.

Thank you all.

Thank you. Your next question comes from Bhavin Shah with Deutsche Bank. You may proceed with your question.

Great. Thanks for taking my question and congrats on the quarter. You guys talked about payments being one of the key drivers of those number of customers that have more than one solution. But how frequently can you get maybe some payments first or marketing first customer to perhaps be up-sold into a core business management solution. And how do we think about that opportunity?

Obviously with the size of our customer base and the number of customers that we have across marketing and technology and customer experience. Obviously, that is exciting to us, the ability to cross-sell that system of action, obviously from a displacements standpoint, that is the place where they may already have something and we're surrounding it with one of those ancillary products. Again, we purpose-built our solutions integrated with payments, integrated with customer experience so that we think that is highly competitive in the market and a real opportunity. The switching cost is just different in those, so it is harder, you're right to say that, but it's a real opportunity and it's an opportunity that our teams are chasing all of the times in our core vertical business management solutions.

It's important to note though as we talk about some of the opportunity, all of the numbers that we share are from that system of action at work. And so although you bring up a really good point, that is clearly opportunity to upsell the payment and marketing the customer experience into the courses of action. And we do that, that happens on a daily basis. But because of system of action integrated to the other solutions is really core to our workflows. That's kind of the numbers we give in terms of the opportunity.

Got it. That's helpful. And just as follow-up and a follow-up to Matt's first question just in terms of the payment, adoption penetration. You spoke about the 34% customer adoption and the volume opportunity in north of $80 billion. But how do we think of that maybe or helping us side the opportunity of customers that aren't using digital payment solutions right now, whether it's from yourself or one of your peers just to understand how much low-hanging fruit there is for you guys?

It's a great question. We have tracked this over time, obviously coming from PaySimple. In our time there, inertia really of the change from a lot of manual processes was still what a lot of folks were doing. They're likely not using a full suite digital solution. They may be using an old hand block just swipe terminal in their space. So there are plenty of customers that still have what might be called early digital, but it's not late digital adoption of a true software solution with embedded payments. So we see a lot of opportunity to bring payments into our -- to attract customers for payments through our business management solutions with embedded payments, where today they're using maybe some old terminal that, again, works for their needs, but is not fully integrated into a business management solution. So the opportunity is absolutely still there and pretty large we think.

And just to add to that massive point, specifically, if you think about that customer, utilize that system of action for them to use a payment solution outside of the system of action, it's almost always a two-step process, so there's more and more reasons as we embed on tighter into system of action for them to continue that workflow and accept within our payment ecosystem.

Got it. Thanks again to take my questions. I say congrats.

Thanks you. Our next question comes from Samad Samana with Jefferies you may proceed with your questions.

Hey guys, this is Jeremy Sandler on for Samad. So first question, it's good to see that strong net retention, I guess, to double-click on that a little bit. Are you seeing any -- any particular strengths from specific verticals or maybe specific customer sizes that are contributing to that?

This is this is Matt, thanks for the question. Really, we have seen nice gains across the board, I would not tell you that it's in any one specific vertical, customers that grow with us. So that could be customers of any size, or obviously the ones that are driving that NRR up into the right that -- in the direction that we wanted to, that could be the consumption of -- the upsell, consumption of more of the features that they're already using. Or it could be the adding of a second to a third product through our cross-sell motion. So we're not really seeing that across any specific segment, we're actually seeing it across all of the segments. Got you. That's great. And I guess a similar train of thought, can you provide an update on maybe the mix between the three verticals? I know last quarter EverPro was 60% of revenue, but maybe -- I don't know if there's been any change there.

Well, there's going to be a little bit of a shift between the three verticals, is because we had our first full quarter of DrChrono, which is a bit of a chunkier assets. So that'll uptick our health services a little bit and the others would fall by the same ratio. Got it. Okay that's all for me thank you guys.

Your next question comes from David Hynes with Canaccord Genuity, who may proceed with your question?

This is [Indiscernible] for DJ. Thanks for taking the question. So great to hear you're seeing healthy end markets. But given the growing fear of economic deterioration, can you just help us think about the durability of the business in a recession? I know what -- we saw what happened in the early days of COVID, but how might things differ in a more normal recession or otherwise, how should we think about the resilience of your business in spite of that SMB exposure that you guys have?

That was a great question. Appreciate that. And if you think about the categories that we served, specifically most of the categories we serve were guaranteeing essential services within COVID in their essential services in terms of customers and people utilize them. The biggest difference between before serving, the SMB versus some other companies. Were focused specifically on that service customer versus anyone selling other type of goods. Breakdown the categories, the largest category, home services, it's primarily break it, fix it. Weeks the plumber, HVAC, electrical things like that, we believe that will be non-cyclical and not very much affected and it wasn't affected during COVID nor do we expect much pushback on recession. And the second-largest vertical as Marc touched upon that has grown since our DrChrono is health services, and that's people going to doctor, and that's again, non-cyclical, doesn't really change much during recessionary period. And the much smaller category, which is our health and wellness, which is less than 40% of business is if people are going to get their haircuts during recession and any of the fitness studios we serve or primarily the smaller one, a type of fitness's people paying $10 a month. So we feel pretty insulated, as insulated as you could possibly be with over 600,000 customers and multiple verticals and in many different sub verticals. I think we're -- it's positioned as we could possibly be to withstand whatever comes our way. That's great to hear. And then maybe just digging in on each of your core verticals. Can you just sort of speak to the health you're seeing across each of those three end markets? And then maybe remind us of like any seasonality we might see across these business units over the course of the year. Thanks.

So really the unchanged from Q4 in the Q1 in terms of health of each of the three verticals, services vertical remains healthy as does the EverHealth vertical market as well. And then EverWell, if there is a place just given our geographic geography of solutions in that particular category, which has been affected through’21, a little bit from the pandemic within that particular vertical, that would be the only one is doing well and certainly growing within the rates that we expect to grow but it's probably lagging the other two. I think -- what was your second question if you just go back to the second part of your question. Seasonality of those three businesses. Seasonality continues to be the same, right? 2 and 3 or the big seasons for us given our exposure to home services, as we just talked about. While that's not as not as high, this quarter, just because we have a full-quarter of operations with Dr. Fairnow, it's still is over 50%, so you will see a seasonal Bob in the business in 23 quarters for and water seasonally lower. And what is probably the seasonal lowest? Great. Thank you.

Your next question comes from Brad Reback with Stifel, you may proceed with your question.

Great. Thanks very much. Eric, obviously a lot of questions today around the economy. As you track your business, what type of metrics will you keep an eye on that would cause you to slow down investment, be at people, brand or marketing?

Thanks for the question. It's a great question. Again, we have the benefit again, not only of the scale, the customers we're serving, but because we're great digitally focused, we get a see real-time kind of response rates on our campaigns that are happening across as you can imagine, many [Indiscernible] verticals and many kind of long-term scenario. So we get to see -- based upon that response rates, based upon the workflows that happens when somebody respond, that's the first trigger that we'll be able to see. Secondly, again we watch from on boarding to attrition, we getting upticks any type of early attrition that the Cohort that joined us in any particular month that we're tracking are trading at a higher rate or a quicker rate than previous cohorts. And so because of the scale of the customers that we see on a literally daily basis. The marketing campaigns we run, and the on boarding of new customers. We're able to get real-time of use of what's going on. And if there is a reason to pull back investments into refocus dollars, whether that is a new category, new marketing engines, or just a pull it back in general, will be able to effectuate that relatively quick. Marc you'd like to add to that?

They're all some indicators without marketing technology solutions that we sell from a lead gen perspective, we do get to see and witness consumer behavior from a buying standpoint. So those are also other early indicators that we do look at along with the B2B indicators that Eric talking about, that will give us that insight and view and understanding of what's going on in the economy.

That's great. Thanks very much.

Thanks, Brad.

Thank you. Our next question comes from Alex Sklar with Raymond James. You may proceed with your question.

Thanks. Marc, can you talk about pricing as a lever for growth, just given the inflationary backdrop, how your contracts are structured in terms of annual escalators and any change based on the renewal activity in Q1?

No change. And it's a great question, Brian, so appreciate that. I think we through all of our solutions are always looking at pricing, price to value, appropriate escalators. Most of our contracts actually don't have auto escalators, and some do. But the majority do not. So it's at our discretion, and certainly, we think about that not just from an inflationary environment, and that's something obviously we continue to watch as we go through the year. But also something, frankly, we really think much more around the value prop, the competitive market, etc. Those are probably drivers we pay attention to a little bit more closely. So -- but overall philosophy has not changed as of yet, and we'll continue to evaluate through the year. Obviously, it's a lever that's not been a lever that's been at all the primary driver of our growth historical.

Got it. Okay. And I don't know who wants to say this one, but just wanted to ask on the linearity of sales activity this year. You had a lot of momentum exiting 2021 and ours expanding in the quarter. But we had Omicron headwinds, there's been some inflationary pressures, is there been any change in monthly activity, January to April?

Specifically, to sales activity on our side?

Yes, that's right.

Not that we've witnessed, we actually had a nice strong quarter from a booking standpoint. That was across-the-board across our various verticals. So no, we did not see change in linear impact from January to April, it was -- Q1 was a good solid quarter for us.

Okay. Great. Thank you.

Thank you. [Operator instructions] Our next question comes from Clarke Jeffries with Piper Sandler, you may proceed with your question.

Hello and thank you for taking the question. I just wanted to follow-up on that last question. Certainly the start of the show this quarter seems to be the cross-sell and up-sell effort with multi-product and payments. But I think getting at the heart of several of these questions on the macro side, I guess qualitatively, how did customer acquisition at the growth add level fair in the quarter and looking into April, were gross adds in line or better than your expectations for the business?

That's great question, Clarke. Appreciate it. From an expectation standpoint, the new customer acquisition engine is working well, it's always been highly scalable, highly efficient. As you know, digital is a core channel. A lot of that digital acquisition converts into self-serve. We're excited and positive about the Q1 results. It was where we wanted to be from a plant perspective, as I just spoke to from -- the bookings were a very good solid quarter from our new bookings standpoint.

Great. And then as we think about the 2022 investment plan, in terms of your international exposure, how are you contemplating funding or fueling the business that's residing internationally today? Are you seeing any differences in the demand environment between international and the U.S. part of the business?

No, we're not really seeing any difference. International again, DrChronto being a little bit Chunkier, [Indiscernible] that's actually brings our international down as a percent of overall revenue. Look, we see great opportunities in our international solution organizations and we're continuing to invest in them. As per plan. Nothing has obviously it's a time when the macro environment is sort of the big elephant in the room. But I think as you've heard, a number of different ways, we haven't seen that effect and feel good about the way we ended the quarter and how that positions us for the year going forward. And it's also important to International exposure is, and I mean it's primarily in Canada, Australia, New Zealand, a little bit of UK. We're very little overall. General Europe exposure,

Yap. thank you.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Eric Remer for closing remarks.

I appreciate that. That was really a great start to the year and another really great quarter for EverCommerce, as we've said several times, we want to be elite growth SaaS companies balancing both durable growth and profitability. The collective team is executing at a very high level; we remain extremely excited about the growth of the business. As we continue to be the digitization of the service economy. Appreciate it when joining today. And thank you so much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.