Q3 2022 EngageSmart Inc Earnings Call
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Good morning. Thank you for attending today's engaged smart third quarter 2022 earnings call My.
My name is Shelby and I'll be your moderator today, Oh now turn the call over to Josh Smith as engaged smart Josh.
Thank you good morning, and welcome to our Q3 2022 quarterly earnings call with me on the call today or Bob Bennett, Chief Executive Officer in Cassandra Hudson Chief Financial Officer.
Earnings press release supplemental presentation and associated form 8-K can be found at investors got engaged smart dot com.
During this call we will be discussing certain forward looking information actual results could differ materially from those contemplated by these forward looking statements. Please refer to the risk factor section of our annual report on Form 10-K, and other SEC filings for more information on the risks regarding these forward looking statements and risk factors associated with our business all <unk>.
<unk> discussed during this call are non-GAAP , unless otherwise noted a reconciliation of non-GAAP metrics to the nearest GAAP metric as well as statements regarding my management believes these measures provide useful information can be found in our earnings press release and supplemental presentation, both of which are available on the Investor Relations section of our website.
This call is being webcast live and will be available for replay on our website at investors Dot engaged Mart dot com.
I would now like to turn the call over to our CEO Bob Bennett.
Thank you for that introduction, Josh good morning, everyone and thanks for joining us on our call to discuss our quarterly results today Q.
Q3 marked our one year anniversary of being a public company and it has certainly been an eventful year, we have repeatedly beaten our revenue and adjusted EBITDA guidance every quarter since our IPO. This is a testament to the strength of our business model and the huge need for our offerings to the ongoing quest to digitize business.
And consumer engagement and legacy industry.
To date the market dynamic has remained relatively strong despite the macro economic flux.
This is due to the continued demand for mental health and wellness services and the durability and predictability of services to help consumers. He's the payment process for their bills and charitable donations and.
And our results speak for themselves.
And gave smart delivered record revenue of $78 $8 million, representing 42% year over year growth, all organic and adjusted EBITDA of $13.2 million, which is 16.8% of revenue for the quarter. We saw strong demand for our vertically Taylor true <unk> solutions.
Fueled by growing customer affinity for digital experiences rapid adoption of modern technologies and legacy industries and a continuing shipped to electronic payments all results demonstrate our customers success using our solutions our market, leading software and are attractive competitive physician I'd like to thank our teammates for their.
Dedicated efforts or momentum and success are driven by their tremendous work and relentless pursuit of customer satisfaction.
Before Cassandra dives deeper into the details of our financial performance I'd like to share some highlights.
S M B delivered outstanding growth of 52% year over year, driven by high demand for our simple practice solution and mental health and continued traction in new verticals, such as speech language pathology and occupational therapy, we know serve over 94000 customers in more than 154.
Practitioners across our wellness verticals, turning to our enterprise segment enterprise achieved 31% year over year revenue growth driven by strong momentum and our verticals.
Cloud, our largest enterprise solution posted another robust quarter fueled by high digital adoption across all courts.
We also implemented our solution with several new Villiers and utilities insurance and tax this quarter.
To provide more color on our excellent results in the S. N P segment, we see.
The high demand for our simple practice solution in our core mental health market a market that unfortunately continues to be characterized by a shortage of professionals coupled with strong demand for care.
According to the National Alliance on mental illness, three quarters of Americans.
They are not content with the state of mental health treatment in the United States.
Many therapy seekers struggled to find the best provider for them get in contact with that provider and successfully book an appointment simple practice with a network of over 154000 mental health and wellness practitioners and online scheduling features is uniquely well positioned to help address these problems and connect <unk>.
<unk> to providers, we are excited about driving change in this industry and the huge opportunity before us and to.
September we launched our simple practice enterprise offering a study from the Hartford shows it from 2022 2021, 70% of employers saw an increase in usage of employee assistance programs called E. PS due to increased stress and burnout find.
Mental health practitioners is becoming increasingly difficult inexpensive.
This is not only affects the individual care seeker, but also employers E. P's as managed care organizations, abbreviated is M. C E O's and we believe a lasting solution must include all parties. We believe we can address inefficiencies around the supply a therapist and quality of care with simple practice enterprise through.
Simple API integration that connects to providers simple practice accounts schedulers, either members or care coordinators can instantly view their availability and request an appointment. This in turn creates an easier more streamlined referral process for providers and is designed to increase both provider and patient sad.
Faction by enabling easy scheduling with simple practice, our goal is to reduce the administrative burden for providers within E. A P. R. M. C E O's, while also simplifying the patient journey with quicker access to mental health care when they need it most.
It is still early days and we don't expect material contributions to revenue in the near future, but we're excited by our progress and they continued interest from employers and health plans are simple practice enterprise clients include small medium and large eap's, whose combined enrolled members total more than 130 million.
Individuals, we're seeing great traction with early partners as evidenced by an increasing number of bookings and successful appointment.
Back to date has also been very encouraging as an example, Kristen Matthews cheek clinical officer for K G. A associates, a new England Bay C. A P that we side agreed that it's critical to make the behavioral health provider referral process as efficient as possible.
Simple practice enterprise they are able to easily access the calendars of their provider piano, who are also simple practice customers and request appointments immediately.
We are looking forward to further exploring this opportunity and are excited about the potential contribution to our simple practice flywheel as we capture E. A P and M. C O in network providers, who previously did not use simple practice.
Now turning to other specialties. These are still a smaller part of our business, but we are encouraged by the strong growth. We are seeing particularly in speech language pathology in occupational therapy. We believe we have a compelling product markets. It in the specialties because practitioners have similar documentation compliant insurance and billing needs to.
Mental health customers. Most importantly are all in one approach make simple practice easy to use for them, while quickly and significantly reducing their administrative burden we.
We continue to invest in our simple practice solution to further simplify administrative tasks and tailor a solution to our specialty we work closely with our customers to add features and functionality to drive higher value for that most recently, we introduced a practice dashboard, which gives practitioners in at a glance view of the finance.
It'll help with their practice this is especially valuable for group practice owners because it improves their ability to track important financial and operational metrics with easy to Digest Visualizations.
We are also excited to announce that we have recently hired Ian Knox as T product officer.
And brings over 20 years of product leadership experienced a simple practice.
He has worked across fortune 500 companies and other high growth businesses and as deep experience with fast products API platforms and marketplaces with his leadership, we will continue innovating to better serve our practitioners and their clients.
In addition to product innovation, we continue to invest in marketing to drive a car from word of mouth referrals are are most efficient marketing channel.
Particularly as we are rapidly growing a referral base each quarter at the same time, we are seeing great traction with our investments in digital marketing, including paid as of yet.
These enable us to broaden our brand awareness beyond existing customers and their network and allow us to reach a larger audience that was previously not aware of simple practice.
Now turning to our enterprise segments are strong results were driven by customer go lives fuelled by our partner assisted selling motion and high digital adoption with the existing customers. In Q3, we were particularly excited about our momentum and utilities, where we saw record digital adoption.
Notable customer lunches include the city of Springfield, Ohio, and the city of Bowling Green, Ohio utilities, and a world of Verizon cause the ability to increase cost saving behaviors like paperless billing and Autopay enrollment is critical to customer satisfaction and that is why dealers keep choosing in voice cloud, what's so remarkable about.
Our solution is how quickly we achieve results as an example, the city of widely Texas saw a 13% decrease in service shut off and and 18% decrease in mailed in checks within the first six months of implementing in boys club and our solution drives a higher number of online payments over time <unk>.
Or in Utah for example received 75 per cent of Bill payments electronically since implementing invoice cloud in April 2021 in Truckee Meadows, Nevada over 12 months, a four X increase in paperless enrollment a 22 per cent increase in autopay adoption and a 20 per cent decrease in mailed pain.
<unk>.
We are also seeing great results in financial services, we signed an alliance with insurance software supplier intelligence, a fat brain, a I company to provide insurance carriers and their policy holders with the premier billing and payments experience <unk>.
Additionally, we onboarded nine insurance customers, including the Norfolk in Dedham group.
Across these customers we developed integrations for for customer information systems are rapid growth in the insurance industry demonstrates the importance of is simple and intuitive policyholder and claim it to experience that drives customer satisfaction and higher levels of digital adoption and that's because we partnered with our customers.
Drive results Ellington mutual for example, double payment options to allow customers more flexibility when paying bills via digital wallet text phones or Paypal, 18th a seven X increase in Autopay adoption of 63 per cent increase in paperless enrollment and a significant decrease in print mail cost per se.
Ultimately improving their bottom line and customer satisfaction.
However, the real wind per hour insurance customers is automatic renewal for policyholders. We're also excited about our success and tax and Q3, we sign five new county tax clients in four different states. We recently signed an alliance with Deb net a leading provider of property tax software tailored to meet the needs of loca.
Governments across 11 states, we look forward to further broadening our market share and tax as we implement our solution in the coming quarters and.
In summary, we've had a great third quarter, we continued to drive further traction in the market for products that help save labor costs increase operational efficiency and drive customer satisfaction. We delivered strong results across our vertically <unk> solution driven by continued customer demand pay or adoption on our platform and gray.
Eight customer retention.
Sleeve that this is a testament to the strength of our business model and our market leadership position and customer engagement software with integrated paid with that I'll hand, the call over to our CFO Cassandra Hudson Cassandra.
Thank you Bob.
<unk> experienced another strong corner of financial performance, which exceeded our revenue and adjusted EBITDA guidance.
We remain focused on delivering strong revenue growth with balance profitability and are pleased with the continued momentum we experienced in both pregnant of our business.
As a result, we are again, raising our 20th 22 guidance on both the top and bottom line.
We now expect a revenue to be in the range of 300.5 million to 302 million and adjusted EBITDA to be in the range of $46.5 million and $47.5 million, which represents an adjusted EBITDA margin of 15.6 per cent at the midpoint.
Revenue guidance implies 39 per cent growth year over year at the mid point and assumes that our growth in queue for moderates from Q3 levels as expected.
To the pattern of new customer and practitioner license add that we have experienced this year.
Total revenue for Q3 was 78.8 million, representing an increase of 42% year over year fueled by crossing customer account and transactions processed.
The end of Q3 2022 are total customer account with 97800 and increase of 26 per cent over the prior year.
Our customer growth continues to be mainly driven by new customer additions from our digital marketing programs and word of mouth referrals and R. S. N P segment.
We also delivered strong growth in transactions processed in Q3, we process 37.5 million transactions up from 28.6 million in a year ago quarter, representing 31 per cent Krauss.
R. S. M. B segment continues to perform well with third quarter revenue coming in at 42.9 million, representing 52 per cent growth year over year.
Subscription revenue of 31.2 million grew 62% year over year and was marked by strong new customer adds and a 26 per cent increase in average subscription revenue per customer versus prior yet.
The subscription <unk> increase continues to be driven in part by the pricing and packaging changes be made earlier this year as well as expansion with existing customers.
As a reminder, with a stronger than anticipated impact on our poo from our pricing packaging changes we are seeing a pull forward impact that is driving higher revenue crowd. This year. This sets us up for tougher quarterly grocery comparisons next year overall, the pricing and packaging changes continued to be well received by our customers cause we are seeing healthy adoption.
Some new accounts in Toronto kernels that are scaling with our customer crowd.
Transaction and usage based revenue of 11.3 million grew 32% year over year as more transactions on our platform or processed.
Our enterprise segment also delivered strong results with reported revenue of $35.9 million, representing 31% year over year growth driven by new customer adds stronger digital payment adoption and revenue per payment growth from our older utility cohorts.
Other revenue, which includes hardware unprofessional services and is generally one time in nature increased to 600000 year over year in Q3 2022.
Transaction and usage bases came in at $32.6 million, representing 31 per cent growth year over year.
As a reminder, we have a mix of 60 and per cent of volume pricing model within our enterprise segment, we believe rising inflation will lead to offsetting transfer enterprise business for me.
Therefore, do not currently expect a material impact.
To provide for their color on the top line I'd like to outline the primary gross driver's breath and be an enterprise going forward.
<unk> N D. We expect to see strong demand for our simple patch a solution in our core market. He would buy a shortage of mental health professional couples with an increasing need for care.
This demand environment is currently driving consistent top of final trends and customer at M. S. N. B. In addition to acquiring new customers, we scale with our customers and increased our average revenue per customer as our practitioners crowd there practices and add more simple practice seats. They use additional features purchase higher price packages and <unk>.
That's more payments through our solution.
We're encouraged by the practitioner gross per practice this quarter and excited about the opportunity we see with group practices.
We are making progress on our strategy of replicating are successful play button mental health across other wellness sparkles, we continue to see traction in speech language pathology in occupational therapy for me already have a strong product might get set. In addition, we are investing in our solution to further develop perfectly Taylor teachers intended to increase our market share.
We are excited about our large market opportunity and runway as we invest for growth and unlock our full potential in mental health and other specialty.
An enterprise we are building on our momentum are steady growth is driven by our focus on product innovation and customer experienced which enables us to drive superior race of digital adoption, we invest in further simplifying the customer experience by adding functionality that removes friction to drive higher value for our customers.
We remain highly focused on continued sales and implementation execution to fuel new customer <unk>.
This quarter, we achieved a number of new C. I S systems integration that we believe will build a foundation for successful go lives in the future.
Are excited about our success in traction and insurance and tax, notably we signed alliances and clients in new states. This corner that we believe create longterm tailwinds for additional targets. As an example, we recently signed three County, North Carolina, which quickly led to the signing of an additional North Carolina County.
We are also pleased with quarterly go lives with our tax dollars, including the launch of Allen County, Indiana, you payment system.
Lastly, we continue to invest in our strategic alliances to drive new customer crowd.
Q3, we sign six new alliances across utilities insurance and tax and are looking forward to kicking off joint implementation in the coming quarters.
Now moving onto margins are adjusted gross margin for Q3 of 2022 increase to 78.5 per cent from 77.5 per cent in Q3 of 2021, primarily driven by the results of our S. N D pricing and packaging changes that occurred in Q1 2022.
Sales and marketing expenses were 25 million up 7.1 million and enterprise, we continue to invest in our partner relationships and sales head count to drive top line revenue growth.
S M. B, we invested meaningfully in digital marketing to drive new customer acquisition as well as brand marketing to drive awareness for our solutions and the verticals we serve today.
R&D expenses came in at $12.3 million up 3.4 million driven by our longterm focus on maintaining product leadership in both of our segment.
TNA costs for 12.2 million up 3.8 million, primarily driven by public company operating costs.
Adjusted EBITDA was 13.2 million for the quarter, representing 16.8 per cent margin compared to 8.7 million or 15.6 per cent Martin in the third quarter of 2021.
As a final thought we operate in defense of vertical that we believe to be characterized by their recurring and non discretionary nature. We continue to believe that these markets should remain attractive and vibrant even in economic downturns, an inflationary periods and we remain confident in our ability to continue to deliver a profitable growth in the future.
Now turn the call back over to Bob the closing comment.
Thank you Cassandra Wowser.
We found it engage smart because activities like paying bills scheduling appointments onboarding, new patients and client communications it shouldn't be that hard our success is driven by three simple factors first are proven customer focus playbook driven by a players companies are just collections that people are people help us continue.
Winning and there are tremendous work and relentless pursuit of customer satisfaction drive our momentum and success.
That's why we are committed to be proving retaining and developing top talent.
Second product leadership as measured by adoption and retention customers want to work with the best as in the best people and that's engage Martin we leverage our deep vertical expertise and put our customers at the center of our decision making to deliver innovative market Lady solutions third are large market and runway we.
Address a 28 billion dollar U S market and have captured about 1% of market share.
We are excited about the massive it's opportunity before us and continue to invest in our solutions to unlock engage smart full potential.
Main focused on the lighting, our customers growing our business and creating shareholder value, while we make a positive impact in the world.
We appreciate you all joining us on this call and thank you very much.
At this time, if you would like to ask a question. Please press the start and one on your Touchtone phone he may or move yourself in the queue at any time by pressing star too.
Once again that is star in one to ask a question.
For a moment to allow questions to Q.
We'll take our first question from Bob Nicole Lee with William Blair.
Alright. Thank you good morning, and while it's a nice results are there.
And Cassandra.
Just on the outlook as we move into 20 twenty-three lots of questions around the macro in your business being recession resistant have you seen.
In your pipelines your new business pipelines, no any effects from the macro and now maybe if you could get any color and how that pipeline looks for new business to be added over the next year.
Hey, nice to hear your voice.
Everything is good in Chicago land for Ya, we haven't really seen.
Negative impact at this point from the macro where.
Especially optimistic so as you can see the.
The numbers speak for themselves, but yeah steady as steady as it goes so far.
And then just I would say the.
Enterprise moved for.
Larger in your.
I.
Get simple practice business. If you would what are your thoughts around the Tam and what are your I know, it's gonna take some time to build but.
What kind of feedback are you getting and what do you think about that can do to your business over the next few years.
Yeah simple practice enterprise is really connecting patients to caregivers that are on the simple fact is platform today.
We're actually quite excited about the attraction that we're getting steady growth in appoint.
Appointment in from the E P as in M. C E O's.
The reaction and response, we're getting from them is very strong also from our customer base.
We think it's a big place for US we think that you know.
Finding your patients are.
Struggling to get appointments make appointments and get the care that they are needing because there's so many clinicians and we actually have quite a few of them as you know over 150000 conditions and wellness and practitioners and wellness that.
That we can provide a nice online directory for scheduling appointments and so we're we're very excited about it we think that it's going to ultimately drive demand for us for new account as well as other opportunities for us to.
<unk> another area so.
August .
Thank you I appreciate it.
We'll take our next question Terry Tillman with tryst.
Yeah, Good morning, <unk> Cassandra <unk>.
So I guess, maybe the first question is on the product packaging benefits Cassandra you spoke about that you've talked about it actually throughout the year in terms of the benefit and and how it is helping drive outside's gross and <unk>.
Could you help us maybe going forward what are some of the key all set or to a tough comp that we're gonna have to grapple with on <unk> and and you know how do we think about maybe a normalized <unk> growth going forward and then at a follow up.
Sure carrying great to hear from you.
On the pricing and packaging side of things as I mentioned on on the call. You know it ended at 815, a stronger resolve on revenue this year, which has been tremendous and you know I think in terms of your question around where are the offset continued.
Growth and new customer adds you know certainly certainly as an offset there too the tough compare.
On the pricing and packaging you know also you know.
One of the things that we've seen this here is with a roll out of our new starter plan.
You know practitioner is that our earlier on in their journey coming onto our platform and helping them grow their practice being more patients.
Standing there in both of his business, obviously leads to more payments for us I think payments isn't certainly a strong clever for growth and then there's a lot of new things that we're doing we can practice enterprise vips monarch et cetera.
Yeah. So I think we're continued to focus on our strategy of driving new customer <unk> and focusing on Arthur maximization I think those will be the core off that's to next year. Yeah. Just highlight why is that pricing packaging was a little bit better.
Yep, Okay. Thank you and I I like to spread it around with the different business segments, but I can't help myself I wanted to ask you a follow up on on Triple practice practice dashboard.
It's great to see the ongoing innovation and more features and functions, but I'm curious is there any kind of pricing kind of mechanism around the practice dashboard and maybe where where are we on group practice traction in general. Thank you.
Yeah. So we continued to invest in a group practices, Terry and via lots of <unk>. In fact, the the dashboard is particularly applicable to group practices. So they can see that your.
Sort of get a broad view of how their various conditions and practitioners are doing.
Individually as well as as in groups. So yeah. We continue to we continued to invest there there's no pricing <unk>. This is just part of our our.
Unrelated bundled strategy, there's no price change their does not just not an additional fee or anything for that for that dashboard just comes with it.
Terry complaint on group.
As we continue to see the number of practitioners per practice ticked up you know very steady growth this year.
And you know group practices remain a very exciting opportunity for us.
Okay. Thank you.
Thank you.
We'll take our next question in.
Chat with Deutsche Bank.
Great. Thanks for taking my question I guess the first one is following up on that topic. I mean, you have had very strong condition for a customer <unk>.
One of the drivers of with meaningful increase I I would've thought it would maybe trying to the other way if given the starter package, but but how much of this is customer <unk> platform and a growing besides within a business person, maybe adding rebecca from the beginning.
I mean, I would say you know we we continue to see a very healthy mix of practitioners joining group practices you know I think the.
Packages that we have in place the starter plan. In particular is you know it's new for us in helping to get practitioners that are much earlier in their journey onboard with simple practice and up and running their practice.
So that is kind of a new dynamic if you will but we're still seeing practitioner to join group practices very steady rate of growth in that practitioners per.
For a customer right over time and it remains vague area of focus for us.
That's helpful. And then just to follow up on <unk> EBITDA margins and it's really nice to see the continued upside and then you're you're F Y dive for the ear implies nearly 150, the extra large expansion first and last year.
Any thoughts on how we should think about the pay for mortgage financing going forward. Realizing this year at the last study factors from headwinds for greater public company cause versus maybe tailwind from pricing packaging changes as <unk>.
I mean, as you know Bob and we're very focused on.
Driving strong revenue growth with balanced profitability on the EBIT margin side of the equation, we continue to invest more in marketing, we're kind of testing and learning our way through that and incrementally increasing the amount of spend on the marketing side of the equation as we.
You know start to see programs that are bearing fruit. So that is kind of a big area that we're in that thing and focused time and you know it takes investment to drive the groceries that we've seen benzene netgear and for us to support the longterm.
You know growth that we have an opportunity that we see in the market place. So we're gonna continue to be focused on that you know I think you can see from this year to the extent that we have upside on the revenue that does tend to flow to the bottom line. So you know I think that helps too.
Keep us in that more balanced profitability Lane, if you will.
Cause that the debit card.
Thank you.
We'll take our next question from John Davis with Raymond James.
Hey, good morning, Bobbing, Sandra well first of all I'd to touch on the new customers added in the <unk> business. This quarter accelerated nicely to 5000 roughly versus 4000 last quarter. How much of that do you think is just kind of getting through whatever attrition you were gonna have with the pricing changes versus you'll kind of adding new <unk>.
Customers from the starter package may be kind of a new mortgage you didn't have before it is 5000 kind of the the right way to think about kind of a quarterly ad.
Going forward.
I mean, we are very pleased with the continued strength a new customer adds that we sign in Q3, you know I think following pricing impacting obviously, there was higher than expected churn in the first half of this year. So that was <unk> add if you will and you know things have continued.
To stabilize the normalizing Q3, which you know continues to lead to a strong result in new customer adds we continue to see growth. There. It's certainly something that we're very focused on you know to drive growth over the longterm mm Bye you know very positive quarter for arthritis.
A new customer asthma.
Okay, and then just a call to follow up on Terry's question around <unk> headwind next year I think Cassandra you said initially that you expected kind of 500 to a thousand basis points of uplifting is gonna be arpey from pricing. This year that he said it was tracking a little bit better than that is that the right way to think about the headwind.
As we head into next year, obviously pulled out those at all set that will help <unk>, but as we kind of look at the the growth this year versus what we should expect for us and be <unk> next year is it that's kind of the right way to think about the headwind from pricing this year.
Yeah, I mean that is kind of what we indicated in the beginning of this year for pricing and packaging and we did end up slightly better than the 5% to 10% that we expected on our <unk>.
We're not guiding as of 2023 today. So we'll certainly update you guys on our next call, but you know in terms of the impact that pricing and packaging had this year. You know you are you are thinking about it correctly.
Okay squeeze wanted I wanted to know.
Enterprise, Bob just talk a little bit about inflation.
Is it a headwind as a tailwind as it neutral you have lots of questions. There obviously with.
Inflation, where it is today it would probably not go anywhere anytime soon so just just any quick comments there'll be helpful.
Yeah, I mean, hey, J D. Yeah the.
Inflation for us.
Cloud being the.
The primary driver for.
For enterprise.
We have a lot of pricing that's based on a variable rate I mean in other words like it could be $2 95 per cent for tax payments.
Could be.
Apply a fee for certain utilities.
What happens is we.
<unk> said one with another so we think that in an inflationary environment. Other words, if there's a tax bill that goes up.
If you have property assessments the drive higher prices on homes.
Alright are $2 95 per cent actually becomes a little bit more profitable right over to over for those higher inflationary situations. So the net net for us by our evaluation as we might be slightly positive within an inflationary environment, but basically neutral for us.
Okay Fregeau Hiller. Thanks.
And we'll take our next question Scott Berg with <unk>.
Hi, everyone. This is <unk>.
Hi, everyone. This is Michael rack for Scott to that.
Michael how are you.
I'm doing well how are you guys.
Doing great great.
I was just wondering on the simple practice vertical expansion I believe you previously set about 85% in terms of product fit vs. The core core vertical there could you maybe elaborate here on some of the challenges you're seeing in terms of changing the product there might be some positive.
Coming out of that.
Yeah, I wouldn't say that we're seeing.
Actually very pleased with our traction in speech language pathology and in occupational therapy. In addition to our mental health and behavioral health market.
So where.
<unk>, Yeah, we are actually going deeper and driving harder at those.
Those two specialties right now to make sure that we create the appropriate template for success in sort of a recipe that we can drive.
Into other the other specialties as we move along so we really are I think we're doing it the right way getting to a full product market fit in each each specialty and then.
Driving.
Deeper into them one at a time.
It takes marketing spend community a lot of things that have to be done, but I don't think from a product standpoint, where chat.
Challenged in in in development for each of the any of our.
10 wellness specialties.
Right and then maybe just standing on that topic in terms of the competitive side of vertical expansion is that typically the same west kind of the the earlier vertical versus longer term moving into bar are you seeing any differences in the competitive landscape there.
No I mean, I think for some of the wellness vertical is there is there is.
It's not as competitive I mean, we compete with quality quality.
Solutions everywhere are top competitor is actually pen and paper, that's where most of our new conditions come from so they can choose to just do it themselves with.
<unk> spreadsheet and so forth.
We're certainly finding that the value proposition is highly compelling.
Save so much administrative time that it's hard to it's hard to see somebody ultimately once they start using the solution that in a free trial.
Not moving not move forward with it so no I think that in in the other.
<unk> some of the smaller Tam.
Mmm B a wellness professions are you'll have fewer competitors for sure but the solution is still a great good for all of them.
Great. Thank you.
We'll take our next question from Josh back with Keybanc.
Thanks, so much.
Particular question.
Yeah, I wanted to ask it sounds like you're you're getting a really good.
Product markets and speech and occupational so I'm curious as you look out.
That's something where there could be a meaningful portion of the gross.
Next year is it more of a multi your journey and then a little bit of.
Related question, what's your search later on some of these other vertical speech occupational P. T chiropractor Ya, how much bigger than your core <unk>.
Will health broke or just kind of help us frame up the opportunity there.
Sure Josh Thanks for the question.
So I guess first and foremost on speech language pathology in occupational therapy, you know a couple of dynamics to consider.
You know first those markets are smaller than the market. We haven't behavioral health. So that is a factor and then second is we just we're still continuing to see really strong growth in mental health in our core market.
There is a lot of demand for mental health treatment.
<unk> Uhm supply constraints, there with you know needing more practitioners to treat patients and I don't think we see that dynamic changing any time soon so kind of given those two.
<unk>, it's hard to see S. L P as in O T O.
Taking mental health anytime soon as a result.
Hilton Hebron health is more than 90% of our business today.
And you know I don't think we expect the next to shift meaningfully towards the newer Wellnitz article anytime soon.
On the <unk> side of the equation you mean, there is a large opportunity of these other wellness articles and you know all of our $10 billion Tan that applies to the SNB segment 5 billion as the wellness vertical we estimate about $1.2 billion of that is on the mental health side and then the other nine wellness articles make up the <unk>.
<unk>, so certainly a lot of opportunity to go after.
Okay very helpful. And then I also just wanted to ask a follow up on monarch. It certainly seems.
At least extra early to really made some nice strides from a from a <unk>.
Product point of view so.
How how would you characterize really where that stands if you could speak to maybe a little bit the monetization strategy overtime.
Would be great to get your thoughts there as well.
Hey, Josh Yeah, so yeah.
You can go to meet monarch dot com and check it out.
Really the high quality patient.
Patients seeking tool to help find a simple practice clinicians and.
It's getting great traction I mean, we have we're obviously getting a lot of interest in.
And not just interest by us from from <unk> and <unk>.
We're not.
I'm going to discuss the monetization strategy, but obviously one of them. Josh ultimately is bringing you know is is helping to push auditions, who aren't with simple practice on towards simple practice. So that they can get the online calendar and make it easy for <unk> to be able to to sign them up right.
So I think that that.
To be able to schedule appointments immediately and provide the opportunity for our clinicians our customers to accept those appointments. So.
I think it's going really well and.
Yep.
Continue to work on driving.
Ease of use to the <unk>.
That connects and so forth, but going really well.
Great. Thank you Bob <unk>.
Thank you you bet.
Once again, if you would like to ask a question. Please press Star N. One on your touch 10 town.
We'll take our next question from Raquel Petesch, what J P. Morgan.
Good morning, guys and thanks for taking my question I have is.
Curious I know on transaction <unk> customer you guys spoke about dot decrease their being a trade off the subscription repackaging repricing, but if any part of that are you able to disaggregate returns and parts of the appointment that.
Payment's not being processed by engage smart you can speak to kind of any <unk>, you're saying there.
Alright, thanks, Thanks for Cal Nice hearing from you.
You know you're you're exactly right. There are tradeoffs that happen and that did happen with the pricing and packaging on me at 70 side.
Between subscription and transaction is here so that is certainly a driver and the.
Action revenue performance in the quarter Uhm, we continue receive really strong performance between in person and and telehealth visit.
So I don't think we see any changes in the dynamic they're the one thing I would highlight is.
Last year, we were certainly deeper into the pandemic and I think you know people, who are not taking vacation and weren't able to take vacation as I'm as easily as they were this year. So we're kind of returning to a more normal seasonal pattern as expected, but by and large the trade.
<unk> between pricing package and packaging. The theory is it is a big driver there.
Thanks for the color.
No problem.
We'll take our next question in case and cut prefer.
Bank of America.
Good morning, popping Cassandra this is Tyler pawn on for Jason. Thanks for taking the question I had to hop on late so I apologize. If this has been answered uhm, but it looks like that despite some specific.
Revenue per transaction.
I don't Wanna say issues, but.
What's going on within the SMP space.
It looks like the total revenue per transaction is remains quite strong.
<unk> is there anything specific to call out there kind of maintaining that high number and maybe if you can just describe how you're looking at revenue per transaction kind of looking forward into next quarter and potentially even enter 2023. Thank you.
Yeah, I mean, I think it's a testament to our business model.
Really I mean, we have eight a lot of transactional models and play between fixed fee per cent of volumes to that certainly how old. It is kind of our core competency as well and I think.
That speaks to the Testament, you know all of our business model and how we're been performing this year as it relates to revenue poorer payment on the enterprise side. We certainly saw stronger results. In Q3, then even we were anticipating.
In particular within older utility cohort so that was very encouraging to see I think it just speaks to the secular trend of people moving more and more towards digital payments and and we're benefiting that and also the strength of our solution.
Driving them to adopt.
Great. Thank you I appreciate that Cassandra.
Okay.
Thank you and there are no additional questions registered at this time I'll pass the conference to Bob Bennett for closing remarks.
Thank you for for your questions gave.
Gage Mart delivered great results in our third quarter of 2022.
Mentum across our business drove another quarter of record revenue performance.
Standouts are our strong customer growth the increase in average revenue per customer and exceptional customer retention are positioning continues to be compelling as we address our huge U S market opportunity and strong top of funnel pipeline.
Thank you all for joining us and we are excited to speak with you again later this month at cities 2022 been Tech conference.
That concludes today's teleconference. Thank you for your participation you may now disconnect.
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