Q4 2023 EverCommerce Inc Earnings Call

Okay.

Operator: Thank you for standing by, and welcome to Evercommerce's fourth quarter, 2023 earnings call. My name is Daniel, and I will be your operator for today. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is ready.

Thank you for standing by.

And welcome to ever Commerce's fourth quarter 2023 earnings call. My name is Daniel and I'll be your operator for today.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need a press star one on your telephone you well done.

Here, an automated message advising your hand is race too.

Bradley W. Korch: After all your questions, please press star 1 1 again. As a reminder, this conference call is being recorded today, Thursday, March 14th, 2024. And I would now like to turn the conference over to Brad Korch, SVP and Head of Investor Relations for Evercommerce. Please go ahead.

To withdraw your question. Please press star one again.

As a reminder, this conference call is being recorded today Thursday March 14th 2024.

And I would now like to turn the conference over to Brett Court.

D P and head of Investor Relations for Evercore. Please go ahead.

Bradley W. Korch: Good afternoon, and thank you for joining us. 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 ended December 31st, 2023. For a link to the live or replay webcast, please visit the investor relations section of the Evercommerce website, www.evercommerce.com.

Good afternoon, and thank you for joining today's call will be led by Eric Reamer ever Commerce, with Chairman and Chief Executive Officer, and Mark Thompson ever Commerce, as Chief Financial Officer.

Joining them for the Q&A portion of the call is ever Commerce as President Matt Firestone.

This call is being webcast with a slide presentation that reviews, the key financial and operating results for the three months ended December 31 2023.

For a link to the live or replay webcast. Please visit the Investor Relations section of Evercore <unk> website, www dot ever Commerce Dot com.

Bradley W. Korch: The 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 containing the areas of materials available on our website that are not historical in nature may constitute similar-looking statements. Such statements are based on the current expectations and beliefs of man.

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 are 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 and actual results may differ materially from the forward looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC.

Bradley W. Korch: 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 also refer to certain non-GAAP financial measures to provide additional information to you, our investors. 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 it over to our CEO, Eric Remer. Please continue.

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 our investors.

A reconciliation of non-GAAP to GAAP. The circle measures is provided in both the earnings press release and our earnings call presentation.

I will now turn it over to our CEO Eric Kramer. Please continue.

Eric Remer: Thank you, Brad. On today's call, I will highlight fourth-quarter results, discuss Evercommerce's strategic transformation and optimization initiatives, which include the recently announced style of our fitness assets, and finally end with a discussion of our key customer trends before turning the call over to Marc to dive deeper into our financials. At its core, Evercommerce provides business management software that supports end-to-end business processes for serviced SMBs. Our SaaS solutions support highly specialized workflows in each of our verticals, enabling our customers to automate manual processes, generate new business, and create more loyal customers. Our solutions are European tools for our customers and are critical to our customers' businesses. We enhance the value of our business management solutions by upselling and cross-selling additional features, such as robust payment integration, customer engagement solutions, lead generation, and group buying programs. Keeping to our mission statement, we are simplifying the lives of those service providers that support us every single day.

Thank you Brad today's call I will highlight fourth quart results discuss ever commerce, a strategic transformation optimization initiatives, which includes the recently announced sale of our fixed assets and finally end with a discussion of our key customer trends before turning the call over to Marc to dive deeper into our financials.

At its core ever Congress provides business management software that supports end to end business processes for service Smbs.

SaaS solution support highly specialized workflows and each of our verticals, enabling our customers to automate manual processes generate new business, but create more loyal customers our solutions, our ERP tools for our customers that are critical to our customers' businesses.

We enhanced the value of our business management solutions by Upselling Cross selling additional features such as robust payments integration.

Customer engagement solutions.

Generation of group buying programs.

Keeping to our ambitious statement, you're simplifying the lives of those service providers that support US every single day.

Eric Remer: Full-year revenue growth was 9%, and most importantly, we significantly expanded margins throughout the year. Our 2023 adjusted EBITDA margins of 23% represented 380 basis points of expansion when compared to 2022. An absolute 2023 adjusted EBITDA grew 30.7% in 2023, exceeding guidance given one year ago by $17.6 million at the midpoint. Turning to our fourth quarter highlights, our fourth quarter adjusted EBITDA also exceeded the top end of the guidance range. Adjusted EBITDA grew 22% year-over-year and equated to a 25% margin. As you've highlighted in the past, we've seen headwinds in the more transactional aspects of our business, and this was true in the fourth quarter as well, specifically in our marketing technology solutions revenue stream. Due to both macroeconomic pressures and weather-related impact, our MarTech revenue was down nearly 10% year-over-year, impacting overall revenue growth. Consolidated revenue growth in the quarter was 5%. Subscription and transaction revenue, which excludes marketing technology services, was approximately 10%.

Full year revenue growth was 9% and most importantly, we significantly expanded margin throughout the year.

Our 2023, adjusted EBITDA margins of 23%, representing a 380 basis points of expansion compared to 2022.

Absolutely 2023, adjusted EBITDA grew 37% in 2023 exceeding guidance, given one year ago by $17 $6 million at the midpoint.

Turning to our fourth quarter highlights our fourth quarter adjusted EBITDA also exceeded the top end of our guidance range.

EBITDA grew 22% year over year equating to a 25% margin.

As you've highlighted in the past we've seen headwinds in the more transactional aspects of our business and this was true in the fourth quarter as well specifically in our market technology solutions revenue streams.

Due to both macro economic pressures.

March revenue was down nearly 10% year over year impact your overall revenue growth rate.

Solid revenue growth in the quarter was 5% subscription and transaction revenue, which excludes marketing technology services was approximately 10%.

Eric Remer: With sustained growth and profitability, we are creating the opportunity to incrementally invest in our higher growth, higher margin, larger market opportunities. One of our biggest opportunities is to invest to drive growth and payment. Driver payments adoption continues to be a key element of our strategy, and for the fourth quarter, we increased our payment revenue by 20%. Before we dive deeper into fourth quarter performance, I want to highlight an important transaction we announced yesterday that will impact our business moving into 2024. We signed an agreement that will result in Evercommerce exiting the fitness vertical. As we discussed publicly for the past 12 to 24 months, the fitness vertical is less than 4% of our total revenue but is one of our most competitive markets, and our solutions have not recovered to pre-COVID levels of operation. This has resulted in a flat revenue performance, negatively impacting the overall growth rate and creating a drag on our consolidated profitability.

With sustained growth and profitability, we are quite a bit opportunity incrementally invest our higher growth higher margin larger market opportunities.

One of our biggest opportunities is to invest to drive growth in payments.

Driving payments adoption continues to be a key element of our strategy now for the fourth quarter, we increased our payment revenue by 20%.

Before we dive deeper in our fourth quarter performance I want to highlight an important transaction, we announced yesterday it will impact our business moving into 2024.

We started that agree with that result in ever Congress actually the fitness vertical that's what it is.

Gus publicly for the past 12 to 24 months, the fitness verticals, that's 4% of our total revenue but.

But it's one of our most competitive markets and our solutions have not recovered to pre COVID-19 levels of operation.

This resulted in your flat revenue performance negatively impacting the overall growth rate and created a drag on our consolidated profitability.

Eric Remer: We believe that selling our fitness software solutions to a leading large player in the fitness space is the best outcome for our customers, employees, and investors. This enables us to allocate resources to higher growth, higher margin, and larger market opportunities within Evercommerce. The sale of the North American fitness assets closed yesterday, while we expect the sale of the international assets to close following regulatory approval in the third quarter. We will exclude the fitness assets from the guidance Marc will provide in a few moments.

We believe that some of our finished off first wishes for leading large player in the fitness space is the best outcome for our customers employees and investors.

This enables us to allocate resources to our higher growth higher margin larger market opportunities with the never commerce.

The sale of the North American finished assets closed yesterday, what we expected to sell international assets will close following regulatory approval in third quarter we.

We will exclude the fitness assets the guidance Mark will provide a few moments so comparing growth rates and important to note that these assets contributed approximately $24 million of revenue in 2023 at a breakeven contribution to adjusted EBITDA.

Eric Remer: So, comparing growth rates, it's important to note that these assets contributed approximately $ 24 million in revenue in 2023 and a break-even contribution to adjusted EBITDA. The sale of our fitness assets is the first step in our plan to simplify our business and invest in assets that can provide the best growth and strongest returns for our shareholders. In addition to this cell, we're also taking steps to transform and optimize our operations. In the fourth quarter, we engaged a third-party advisor to help us assess our operations and identify specific initiatives and strategies to simplify, optimize, and better scale our operations. With this, we will sharpen our customer-centric vertical market focus to better position us to accelerate growth. There are two main components to this program.

The style of a finished out so that's the first step in our plan to simplify our business and invest in assets that can provide the best growth and strongest returns for shareholders.

Addition to the sale, we're also taking steps to transform and optimize our operations in the fourth quarter. We engaged a third party advisor to help us assess our operations and identify specific initiatives and strategies to simplify optimize and better Sckalor operations with this we will sharpen our customer centric vertical market focus to better position us.

Accelerate growth there.

There are two main components to this program.

Eric Remer: First, we'll be doubling down on our customer-centric vertical go-to-market structure, increasing investments in our key verticals such as EverPro and EverHealth. This includes simplifying our organizational structure and consolidating products and legacy brands, as well as investing in our go-to-market engine. Our ongoing consolidation of solutions within EverHealth, which began last year, was really the beginning of this evolution.

First we'll be doubling down on our customer centric vertical go to market structure, increasing investments in our key verticals such as ever pro that Ralph.

This includes simplifying our organizational structure and consolidated products and legacy brands as well as investing in our go to market engine.

Ongoing consolidation of solutions, but they never health, which began last year was really the beginning of this evolution would.

Eric Remer: With help from our third-party advisors, we've developed plans to fast-track similar strategies with Endeavor Pro. We believe this will help us improve our execution by streamlining functions ranging from sales, marketing, and product development and really help accelerate growth in 2025 and beyond, as well as improve our ability to allocate capital while also enhancing our customer experience. Second, we're going to continue to optimize our operations and cost structure and improve scalability, which will help fund key growth investments and allow us to continue to expand margins and cash flow generation over the coming years. As I mentioned, we completed our initial assessment in the fourth quarter of 2023 and have already begun implementation of several initiatives.

With help from a third party advisors, we developed plans to fast track similar strategies <unk>.

We believe this will help us improve our execution, our streamlining functions ratio from sales.

Marketing product development, and really help accelerate growth in 2025 and beyond.

Well, it's a proof of our ability to allocate capital while also enhancing our customer experience.

Second we're going to continue to optimize our operations and cost structure and a proven scalability, which will help fund key growth investments that allow us to continue to expand margins and cash flow generation over the coming years.

As I mentioned, we completed our initial assessment in the fourth quarter 2023, and have already begun implementation of several initiatives. We expect these transformation optimization optimization initiatives to continue through the next 18 to 24 months.

Eric Remer: We expect these transformation optimization initiatives to continue through the next 18 to 24 months. Turning back to our fourth quarter highlights, we continue to execute on our land and expand strategy. We start with a core business management software and then upsell and cross-sell additional features, services, and products to our existing customers. This enhances the value that our customers receive from the relationship with Evercommerce and drives additional revenue. As we've shown in various examples of previous earnings calls, this translates to lower churn and higher retention. As of the end of the fourth quarter, we continue to see an increase in customers utilizing more than one solution to approximately 82,000. In addition, the number of customers that have contracted and onboarded for two or more products grew 26% year over year to approximately 183,000.

Turning back to our fourth quarter highlights, we continue to execute on our land and expand strategy.

We lead with our core business management software and then upsell cross sell existing customers additional features services and products.

This enhances our value to our customers receive from our relationship with ever Commerce.

Additional revenue.

As we've shown in various examples of previous earning calls this translates to lower churn and higher retention.

Okay.

At the end of the fourth quarter, we continue to see an increase of customers utilizing more than one solution to approximately 82000.

In addition, the number of customers that have contracted on board for two or more products grew 26% year over year to approximately 183000.

Eric Remer: The payments enabled customers in this grouping represent a significant near-term opportunity for payments processing and payments revenue growth for Evercommerce. Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers. This is because we provided significant value to them and their businesses. This fact presents itself through strong net revenue retention. Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, for our core software payment solutions was 100%.

The payments enabled customers. This grouping represent a significant near term opportunity for payments processing the payments revenue growth for ever commerce.

Customers that purchase and utilize more than one solution are naturally suffered most profitable stickier customers.

Because we provide significant value to them and their businesses.

This fact presents itself with strong net revenue retention looking.

Looking back over the trailing 12 months, our annualized net revenue retention or IRR for our core software and payment solutions was 100%.

Eric Remer: Embedded Payments is our most accretive cross-sold solution and stands to be a long-term driver for Evercommerce's revenue growth and margin expansion. Year over year, our payments revenue grew 20%, accounting for approximately 70% of our overall revenue. We report our payments revenue on a net basis, and as a result, payments revenue contributes approximately 95% gross margin and is a meaningful contributor to our overall adjusted EBITDA margin expansion. Fourth quarter annualized total payment volume, or TPV, was approximately $11.9 billion, representing 9% year-over-year growth.

Embedded payments as are most accretive cross sold solution and stands to be a long term driver for ever Commerce is revenue growth and margin expansion.

Year over year, our payments revenue grew 20% accounting for approximately 70% of our overall revenue.

We report our payments revenue on a net basis and as a result payments revenue contributed approximately 95% gross margin there is a meaningful contributor to our overall adjusted EBITDA margin expansion.

Fourth quarter annualized total payment volume or <unk> was approximately $11 9 billion.

Representing 9% year over year growth.

Eric Remer: We expect TPV and overall payments revenue to grow as we continue to embed our payment solutions in our core system of action. I would like to end my portion of the prepared remarks by highlighting an organic growth opportunity for the company that we are incredibly excited about. Ever Pro Edge is a new solution that provides customers the opportunity to save, learn, and grow, creating a community and trusted brand for engagement with them.

We expect <unk> overall payments revenue to grow as you can see them better payment solutions and of course, the Swift actions.

I would like to end my portion of the prepared remarks by highlighting our organic growth opportunity for the company that we are incredibly excited about <unk>.

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<unk> is a new solution that provides customers the opportunity to save learn and grow and create a community and trusted brand for our engagement with them.

Eric Remer: The genesis of EverPro Edge was a customer rebates program that existed within our home and field service solution set. Because of the SMB nature of our customer base, they lack the buying power of typical midsize or enterprise-scale business operations. Now, through their association with Evercommerce, our customers can benefit from the collective buying power of more than 350,000 home and field service providers. They will benefit from real savings on parts and supplies they're already purchasing, and for Evercommerce, we benefit from a revenue share of the rebates and the increased value our customers see from the use of our software.

The Genesis of ever Pro edge was the customer rebates program that existed within our home and field service solution set.

Because of the S&P nature of our customer base. They lack the buying power of typical mid size or enterprise scale business operations now if they're associated with ever commerce, our customers competitive from the collective buying power of more than 350000, how much is field service providers.

Customers will benefit from real savings in parts and supplies you already purchasing if ever commerce, we benefit from a revenue share of the rebates and the increased value of our customers see from the use of our software.

Eric Remer: As part of the EverPro Edge community, our customers also receive targeted business growth and education content to help them drive performance in their business. Over time, we believe EverPro Edge has the ability to accelerate revenue for Evercommerce and decrease share as customers realize more value from the Evercommerce ecosystem. EverPro Edge was launched in the second half of 2023 to our Joyce customer base, and today we have over 7,500 customers using it.

As part of the epic Pro edge community. Our customers also receive targeted business growth in education content to help them drive performance of the business.

Overtime, we believe ever pro edge is the ability to accelerate revenue for ever commerce and decrease churn as customers realize more value from the ever commerce ecosystem.

<unk> was launched in the second half of 2023 to our choice customer base today, we have over 7500 customers using it too.

2024, we will expand the solution traditional system of action.

Marc Thompson: In 2024, we will expand this solution to additional systems of action. Now I'll pass it over to Marc to review our financial results in more detail, as well as provide first quarter and full year 2024 guidance. Thanks, Eric.

Now I will pass you over to Marc will review, our financial results in more detail as well as provide first quarter and full year 2020 for guidance.

Thanks, Eric total revenue in the fourth quarter was $169 4 million up four 7% from the prior year period.

Marc Thompson: Total revenue in the fourth quarter was $169.4 million, up 4.7% from the prior year period. We continue to experience demand-driven headwinds in our marketing technology solution. We also experienced slower growth in our fitness solutions, underscoring our decision to part ways with this piece of our business.

We continue to experience demand driven headwinds in our marketing technology solutions. We also experienced slower growth in our fitness solutions underscoring our decision to part ways with this piece of our business.

Within total revenues subscription and transaction revenue was $133 5 million up nine 8% from the prior year periods revenue for marketing technology solutions.

Marc Thompson: Within total revenues, subscription and transaction revenue was $133.5 million, up 9.8% from the prior year period, and revenue for marketing technology solutions was $30.1 million, a decrease of 9.5% from the prior year period. The solid performance in subscription and transaction revenue was largely due to continued execution of our growth strategy, which provided customers with our core system of action software solutions and driving expansion by promoting cross-sell and up-sell opportunities, leading with payment. To reiterate a point that Eric made earlier, full year 2023 payments revenue represented 17% of total revenue, an increase from 14% of revenue for the full year 2022. Full year 2023 revenue was $675.4 million, up 8.8% year over year on a reported basis, and excluding marketing technology and fitness solutions, our growth would have been 12.2%.

It was $30 1 million a decrease of nine 5% from the prior year period.

The solid performance in subscription and transaction revenue was largely due to continued execution of our growth strategy to provide customers. Our core system of action software solutions and driving expansion by promoting cross sell and upsell opportunities leading with payments to.

To reiterate a point that Eric made earlier full year 2023 payments revenue represented 17% of total revenue an increase from 14% of revenue for the full year 2022.

Full year 2023 revenue was $675 4 million up eight 8% year over year on a reported basis and excluding marketing technology and fitness solutions, our growth would have been 12, 2%.

In the fourth quarter, we continued to deliver on our full year 2023 objectives by exceeding EBITDA guidance and achieving record EBITDA margins fourth quarter. Adjusted EBITDA was $43 1 million, representing a 25, 4% margin versus 21, 7% in the fourth quarter of 2022 and 22 four.

Marc Thompson: In the fourth quarter, we continue to deliver on our full year 2023 objectives by exceeding EBITDA guidance and achieving record EBITDA margins. Fourth quarter adjusted EBITDA was $43.1 million, representing a 25.4% margin versus 21.7% in the fourth quarter of 2022, and 22.4% growth year over year. Adjusted EBITDA outperformance in the quarter was underscored by our focus on actively managing our operating expenses, driving operating leverage, and cash flow generation. Additionally, full year 2023 adjusted EBITDA was $155.6 million, representing a 23% margin and a 30.7% increase compared to 2022. 2023 full-year adjusted EBITDA finished 17.6 million, or 12.8% higher than the midpoints of our initial 2023 guidance given approximately a year ago. Adjusted gross profit in the quarter was $114 million, representing an adjusted gross margin of 67.3% versus 66.7% in Q4 2022.

<unk> growth year over year.

Adjusted EBITDA outperformance in the quarter was underscored by our focus on actively managing our operating expenses driving operating leverage and cash flow generation.

Additionally, full year 2023, adjusted EBITDA was $155 6 million, representing a 23% margin and a 37% increase compared to 2022.

2023 full year adjusted EBITDA finished at $17 6 million or 12, 8% higher than the midpoint of our initial 2023 guidance given approximately a year ago.

Adjusted gross profit in the quarter was $114 million, representing an adjusted gross margin of 67, 3% versus 66, 7% in Q4 of 2022.

Full year 2023, adjusted gross profit was $444 4 million, representing an adjusted gross margin of 65, 8%.

The increase in gross margin is partially attributable to an increasing mix of higher margin payments revenue and a decreasing mix of lower margin marketing technology solutions revenue.

Marc Thompson: Full year 2023 adjusted gross profit was $444.4 million, representing an adjusted gross margin of $65.8. The increase in gross margin is partially attributable to an increasing mix of higher margin payments revenue and a decreasing mix of lower margin marketing technology solutions. Now, turning to operating expenses. Adjusted sales and marketing expenses $29.6 million, or 17.5% of revenue, up from 17.2% of revenue reported in the prior year period. Due to timing of spend, we had anticipated a modest sequential increase in sales and marketing expenses going into the fourth quarter. Adjusted product development expenses were $18.3 million, or 10.8% of revenue, in line with the prior year period. Adjusted G&A expenses were $23 million, or 13.6% of revenue, down from 16.9% of revenue in the prior year period.

Now turning to operating expenses adjusted sales and marketing expense was $29 6 million or 17, 5% of revenue up from 17, 2% of revenue reported in the prior year period.

Due to timing of spend we had anticipated a modest sequential increase in sales and marketing expenses going into the fourth quarter.

Adjusted product development expense was $18 3 million or 10, 8% of revenue in line with the prior year period.

Adjusted G&A expense was $23 million or 13, 6% of revenue down from 16, 9% of revenue in the prior year period.

Adjusted G&A costs declined both as a percent of revenue and in absolute dollars as we continue to achieve cost savings from ongoing consolidation activities benefit from the reduction in force announced last quarter as we and as we anniversary the investments made in 2021 and 2022 to support our public company infrastructure.

Marc Thompson: Adjusted G&A costs declined both as a percent of revenue and in absolute dollars as we continue to achieve cost savings from ongoing consolidation activities, benefit from the reduction in force announced last quarter, and as we anniversary the investments made in 2021 and 2022 to support our public company infrastructure. We continue to generate significant free cash flow as we invest to grow our business. Leverage free cash flow was $29.8 million in the quarter.

We continue to generate significant free cash flow as we invest to grow our business Levered free cash flow was $29 8 million in the quarter. This was up approximately $7 1 million or 31, 3% year over year due to both growth and operating income and changes in working capital for.

For the trailing 12 months leverage free cash flow was $81 5 million, which represents a 12, 1% margin and a 74, 5% increase over the prior year continuing to underscore the efficiency of our business and enhancing our balance sheet flexibility.

Marc Thompson: This was up approximately $7.1 million or 31.3% year-over-year due to both growth in operating income and changes in working capital. For the trailing 12 months, leveraged free cash flow was $81.5 million, which represents a 12.1% margin and a 74.5% increase over the prior year, continuing to underscore the efficiency of our business and enhancing our balance sheet flexibility. Strong, free cash flow generation allows us to continue to invest in our growing business and deliver strong returns to our shareholders. It also allows us to efficiently allocate capital across a spectrum of opportunities, including the outstanding buyback authorization and M&A process. In the fourth quarter, we repurchased approximately 2.7 million shares for a total cash consideration of approximately 26 million at an average price of $9.65 per share.

Strong free cash flow generation allows us to continue to invest in our growing business and deliver strong returns to our shareholders. It also allows us to efficiently allocate capital across the spectrum of opportunities, including the outstanding buyback authorization and M&A prospects.

In the fourth quarter, we repurchased approximately two 7 million shares for a total cash consideration of approximately $26 million at an average price of $9 65 per share.

As of December 31, 2023, we had approximately $40 million remaining in our repurchase authorization that runs through year end 2024.

We ended the quarter with $92 6 million in cash and cash equivalents and we maintained $190 million of Undrawn capacity on our revolver. Our debt is a combination of floating and fixed rate and total net leverage as calculated per our credit facility at the end of the quarter was approximately two six times consistent with our financial policy.

Marc Thompson: As of December 31st, 2023, we had approximately $40 million remaining in our repurchase authorization that runs through year-end 2022. We ended the quarter with $92.6 million in cash and cash equivalents, and we maintain $190 million of undrawn capacity on our revenue. Our debt is a combination of floating and fixed rates, and total net leverage calculated per our credit facility at the end of the quarter was approximately $2.6 billion, consistent with our financial policy.

We have no material maturities until 2020 eights.

I would now like to finish by discussing our outlook for 2024.

We're pleased with our ability to actively manage bottom line results that exceeded expectations as demonstrated by our record adjusted EBITDA and margins. However, we were disappointed in our slower growth impacted by revenue headwinds in certain parts of our business. We believe ever commerce is undervalued in the market and we take our fiduciary duty to create shareholder value very serious.

Marc Thompson: We have no material maturities until 2020. I would now like to finish by discussing our outlook for 2020. We're pleased with our ability to actively manage bottom-line results that exceeded expectations, as demonstrated by our record-adjusted EBITDA in March. However, we were disappointed in our slower growth impacted by revenue headwinds in certain parts of our business.

As yesterday's announcement regarding the sale of our fitness assets illustrates we are not and will not be shy about taking additional actions to simplify our business or increase growth in margins to unlock value.

Marc Thompson: We believe Evercommerce is undervalued in the market, and we take our fiduciary duty to create shareholder value very seriously. As yesterday's announcement regarding the sale of our Fitness Fast Fits illustrates, we are not and will not be shy about taking additional actions to simplify our business or increase growth and margins to unlock value. As we navigate this transformation and the future of Evercommerce without a fitness vertical, we expect 2024 to be a transition year. While growth may be more muted, we will further expand margins and profit. A portion of these efficiency gains will be used to reinvest in our products with the goal to accelerate growth in 2025 and beyond. The following non-GAAP guidance excludes our fitness assets, which, as we stated, contributed approximately $24 million in revenue and near zero contribution to adjusted EBITDA in 2020. Our guidance also assumes near zero growth in our marketing technology solutions on a full year basis.

As we navigate this transformation and the future of ever commerce without a fitness vertical we expect 2024 to be a transition year, while growth may be more view that we will further expand margins and profitability a portion of these efficiency gains will be used to reinvest in our products with the goal to accelerate growth in 2025 and beyond.

The following non-GAAP guidance excludes our fitness assets, which as we stated contributed approximately $24 million in revenue and near zero contribution to adjusted EBITDA in 2023.

Our guidance also assumes zero growth in our marketing technology solutions on a full year basis for.

For the first quarter of 2024, we expect total revenue of 165 to $163 5 million and we expect adjusted EBITDA of $36 million to $38 million.

For the full year of 2024, we expect total revenue of $676 million to $696 million and adjusted EBITDA of $167 million to $176 million.

Marc Thompson: For the first quarter of 2024, we expect total revenue of $160.5 to $163.5 million, and we expect adjusted EBITDA of $36 to $38 million. For the full year of 2024, we expect total revenue of $676 to $696 million and adjusted EBITDA of $167 to $176 million. Before we begin the question and answer portion of the call, I want to thank the entire Evercommerce team for their efforts in delivering bottom-line results that exceeded expectations despite a challenging environment. Our focus for 2024 continues to be centered on balancing growth with profitability, and the transformational initiatives we described today should allow us to do that in a way that preserves continued margin expansion while allowing for growth acceleration in 2021. Operator, we're now ready to begin the question and answer section of the call. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Before we begin the question and answer portion of the call I want to thank the entire ever commerce team for their efforts in delivering bottom line results that exceeded expectations, despite a challenging environment.

Our focus for 2024 continues to be centered on balancing growth with profitability and the transformational initiatives. We described today should allow us to do that in a way that preserves continued margin expansion, while allowing for growth acceleration in 2025.

Operator, we're now ready to begin the question and answer section of the call.

As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from.

Shah with Deutsche Bank. Your line is now open.

Great. Thanks for taking my question.

Tim I appreciate the comments you talked about on the marketing side of the house can you maybe just elaborate a little bit more on the core business software and what Youre seeing maybe it from a new logo side and then retention aspect any changes that you're seeing relative to the last few quarters from a demand perspective on pro route.

I appreciate the question. Thank you so much Matt you want to take that.

Bhavin S. Shah: To submit your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from Bhavin Shah with Deutsche Bank. Your line is now open.

I think quarter over quarter, I don't I don't I wouldn't say, there's any significant changes in trends from a demand standpoint again.

Matthew Feierstein: Great. Thanks for taking my question. Team, I appreciate the comments you talked about on the marketing side of the house. Can you maybe just elaborate a little bit more on the core business software and what you're seeing, maybe from a new logo side and retention aspect? Any changes that you're seeing relative to the last few quarters from a demand perspective on pro or anything else? We appreciate the question. Thank you so much. Matt, do you want to take that?

We've talked about how we go to market.

Largely digital acquisition based in both pro and health.

A significant change from a trend standpoint there.

From a new customer acquisition standpoint, obviously, we also remain incredibly focused on customer expansion.

Certainly pleased but see a lot of opportunity for growth specifically on the payment side of the house and you heard our comments about ever pro edge, specifically on the pro side being a real opportunity for growth that we see in the future. So no major change in trends that we've seen quarter over quarter.

Eric Remer: Yeah. I think quarter over quarter, I wouldn't say there are any significant changes in trends from a demand standpoint. Again, we've talked about how we go to market, largely through digital acquisition in both pro and health, not a significant change from a trend standpoint there, from a new customer acquisition standpoint. Obviously, we also remain incredibly focused on customer expansion, certainly pleased, but we see a lot of opportunity for growth, specifically on the payment side of the house. And you heard our comments about Everpro Edge, specifically on the Everpro side, being a real opportunity for growth that we see in the future. So, no major change in trends that we've seen quarter over quarter. And just to add to that, either customer acquisition or customer retention, it seems to be pretty steady for the last several quarters. That's helpful there. And Eric, maybe just given the demand backdrop, particularly on the marketing side of things, and now the elevator is focused on EverPro and EverHealth, given the sales that missed, how, if at all, does that change how you're thinking about the timing or the size of M&A kind of going forward? Another great question.

Just to add to that on either the customer acquisition or on the.

Customer retention it seems to be pretty steady for the last several quarters.

That's helpful. There and then Eric maybe just given that the demand backdrop, particularly on the marketing side of things and now the elevated focus on an ever pro never house, given the sales fitness, how if at all does that change how you're thinking about the timing or the size of M&A kind of going forward.

Another great question I mean, we're always going to be a focus and open to opportunities in Q4 November we closed the deal focused within the ever.

No.

Vertical.

We think again that perhaps never progress big opportunities that we see a.

Situation.

That makes sense. So we think it can accelerate both growth and overall value to our customers. We will continue to look at those so although we remain active when they make sense, but we're going to be very focused on those specific verticals that we think are good.

Eric Remer: I mean, we're always going to be focused and open to opportunities in Q4. In November, we closed a deal focused within the EverPro vertical. And, you know, we think, again, EverHealth and EverPro have big opportunities. So, if we see a situation and an asset that makes sense, that we think can accelerate both growth and overall value to our customers, we'll continue to look at those. So, we remain active when they make sense, but we're going to be very, very focused on those specific verticals that we think are going to have the biggest acceleration opportunities. Appreciate it.

Biggest acceleration opportunities.

I appreciate taking my questions.

Thank you.

For our next question.

Our next question comes from Ryan Macwilliams with Barclays. Your line is now open.

Thanks, taking the question and great to see the focus on doubling down on your strengths, while improving from operational efficiencies from here, Eric How do you view the potential for other areas of perhaps portfolio rationalizations or potential sale of assets from here.

Eric Remer: Thank you for my questions. Thank you. One moment for our next question. Our next question comes from Brian McWilliams with Barclays. Your line is now open.

Thanks for asking the question again as Ark said really well, we're always going to be focused on maximizing value. Both obviously for the operations and for our shareholders and it will continue to monitor what makes no sense organizationally I do think as we've said several times already in the call and in our prepared remarks that ever growing ever health.

Ryan: Thanks for taking the question. Great to see the focus on doubling down on your strengths while improving some operational efficiencies from here. Eric, how do you view the potential for other areas of perhaps portfolio rationalizations or potential sale of assets from here? Thanks, Ryan, for the question.

Eric Remer: You know, again, as Marc said really well, we're always going to be focused on maximizing value, both, you know, obviously for the operations and for our shareholders, and we'll continue to monitor what makes the most sense organizationally. I do think, as we've said several times already in the call and in our prepared remarks, that EverPro and EverHealth are really great verticals and really great organizations with excellent tier one software and an opportunity to really grow. So, those are the areas that we are, you know, double, tripling down on. We do have very good solutions also in our salon spa assets within EverWell, which was fitness was a part of, so, no, those are kind of standalone.

Our really great protocols, and really great organizations with excellent tier one software as an opportunity to really grow. So those are the areas that we are double or tripling down we do have very good solutions also in our.

Our salon spa assets within the upper well, which was fitness was a part of so those are kind of standalone. Those are growing at really nice cases provide really great value to our customers as well. So those three areas without kind of a vision, where we kind of talk about <unk> and never helps <unk>.

Much greater than on the upper well is just the percentage of business that we have that represents about 75% of our business and the greatest opportunity for us to grow going forward. So we will always look for rationalizations that where it makes sense.

Eric Remer: Those have grown in really nice cases and provide really great value to our customers as well. So, those three areas with kind of a – the reason why we kind of talk about EverPro and EverHealth much more than about EverWell is just the percentage of business that we have. That represents about 75% of our business and the greatest opportunity for us to grow going forward. So, we'll always look for rationalizations that make sense.

We talked about some of the areas that had been dragged on our business and we'll continue to monitor those to see if there is an opportunity.

Again John.

Accelerate growth investments as well as increased shareholder value.

Excellent one for Mark.

Or do you feel about the growth rate of the marketing technology assets from here like do you feel like you've seen the worst of the macro impact at this point and do you view. These marketing technology and this is a core part of the <unk> portfolio or be separate from like move you to add ons like never pro or ever health customer. So.

Marc Thompson: We talked about some of the areas that have been dragged down in our business, and we'll continue to monitor those to see if there's an opportunity, again, to accelerate growth and investments as well as increase shareholder value. Excellent. And one for Marc.

Marc Thompson: How do you feel about the growth rate of the marketing technology assets from here? Like, do you feel like you've seen the worst of the macro impact at this point? And do you view these marketing technologies as like, is this a core part of the Evercommerce portfolio, or would it be separate from, like, would it be an add-on to, like, an EverPro or an EverHealth? Thanks. So, look, I mean, obviously, as we shared in our guidance, in our guidance comments, thinking about it, the trend that that was flat this year, thinking about that into next year, you know, we're always trying to be prudent with our guidance, particularly around this particular solution that we have seen volatility. There are a lot of exogenous demand-driven variables that are harder to predict in that business.

Look I mean, obviously.

As we shared in our guidance.

Guidance comments thinking about the trend that was this year flat thinking about that into next year.

We're always trying to be prudent with our guidance, particularly around this this particular solution set we have seen volatility. There is a lot of exogenous demand driven variables that are that are harder to predict in that business.

Said that I do think we sort of talked about in the second half of last year stabilization, there and I think our performance to be quite honest.

We feel pretty good about our performance in terms of stabilizing the operation I think going into this year. The team has some nice ideas on how to.

Reduced some of the volatility on the revenue side and continue to work hard on margin.

Marc Thompson: We do having said that, I do think we, we sort of talked about in the second half of last year stabilization there, and I think our performance, to be quite honest, you know, we feel pretty good about our performance in terms of stabilizing the operation. I think going into this year, the team has some nice ideas on how to reduce some of the volatility on the revenue side and continue to work hard on margin. So, we're doing the best we can relative to the backdrop, and I think we have positioned ourselves for upside should it come from some of those exogenous positive factors, hopefully with a macro tailwind instead of a headwind. I was just gonna say on the other part of your question, Ryan.

So we're doing the best we can relative to the backdrop and I think we have positioned ourselves.

Our upside should it come from from some of those exogenous positive factors hopefully with the macro.

A tailwind instead of a headwind.

It's just going to say on the other part of your question Ryan.

Getting technology.

The investment thesis there remains true.

These are solutions that are SMB service providers do need they are a third derivative and when we talk about driving dollars a door our highest growth.

Largest market opportunities, we always lead with payments because of the scalability and the profitability and the Tam available to us in that regard.

Marc Thompson: Marketing technology, the investment thesis there remains true. These are solutions that our SMB service providers need. They are a third derivative.

Some of our <unk>.

Artesano SaaS solutions fall into that same category marketing technology solutions that cross sell motion.

Marc Thompson: And when we talk about driving dollars into our highest growth, largest market opportunities, we always lead with payments because of the scalability, the profitability, and the TAM available to us in that regard. Some of our horizontal SaaS solutions fall into that same category. Marketing technology solutions, that cross-sell motion is a different motion and requires more investment to get there. So, we don't think of it as something that's not required by our customers. We think of it as something that absolutely is, and we work to connect those dots. But I would say it is that third derivative.

<unk> is a different motion and requires more investment to get there.

So we.

We don't think of it as something Thats not required by our customers. We think of it as something that absolutely is and we work to connect those dots, but I would say it is that third derivative if you will.

Thanks, Brian Brian its a great question.

This is a core.

It's not core to set up the core part of our business. We said this over again, it's providing customer centric vertical software to service based Smbs. That's the core that's the core of everything we do provide additional value to enhance.

Marc Thompson: Thanks, Mark. Ryan, it's a great question. Your answer is a core.

Eric Remer: I mean, the answer is it's not core in the sense that the core part of our business, and we've said this over and over again, is providing customer-centric vertical software to service-based SMBs. That's the core, you know; that's the core of everything we do. Providing additional value to enhance their value as well as provide more success is where marketing comes in. Unlike payments, where we've done, right off the bat, a really good job integrating and penetrating the market, MarTech has been a little slower to kind of make that uptick. It is an add-on versus kind of core to what we do, but we'll continue to kind of work to make it better, you know, sell through our ecosystem. Really great color there.

Their value as well as provide more success is where marketing came in.

Payments, where we've done.

Right off the bat there really good drop integrating at penetrating that market <unk> has been a little slower to kind of.

Make that uptick so it is an add on versus kind of core to what we do but we will continue to kind of work make it better.

Sell through our ecosystem.

Really great color there thanks, guys.

Thank you.

For our next question.

Okay.

Our next question comes from Alexander Sklar with Raymond James Your line is now open.

Yes.

Great. Thank you just one for me I don't know, Eric or Matt I, just wanted to see what have you seen in terms of kind of deal sizes or expansion activity.

Eric Remer: Thanks, guys. Thank you. One moment for our next question. Our next question comes from Alexander Sklar with Raymond James. Your line is now open. Great, thank you. Just one for me.

Matthew Feierstein: I don't know, Eric or Matt, but I just wanted to see what you've seen in terms of kind of deal sizes or expansion activity with some of the solutions that you already went through the brand consolidation with that's helping you kind of push forward with the everpro side in terms of driving further brand consolidation. Thanks. Yeah, I mean, as we've talked about in the past, we're obviously further along from an EverHealth standpoint. We've seen nice successes playing on our thesis of a core system of action with those integrated value-add solutions. In EverHealth, that's been the integration of our claims clearing house, the integration of our patient engagement solutions, and the integration of our patient payment capabilities, just think core payments from that standpoint. And we've seen nice progress across all of those. The integration of our core claims clearing house continues across multiples of our systems of action there, and we're actually through that in one of them and making nice headway in another.

With some of the solutions that you already went through the brand consolidation window, that's helping you kind of.

Such forward would they ever growth side in terms of driving further brand consolidates. Thanks.

Yes.

We've talked about in the past, where obviously further along from from an ever health standpoint, we've seen nice successes.

I'm playing on our thesis of core system of action with those integrated value add solutions than ever health. That's been the integration of our claims clearinghouse integration of our patient engagement solutions and the integration of our patient pay capability, just think core core payments from that standpoint, and we've seen nice progress across all of the integration of our core claim.

Clearinghouse continues across multiples of our systems of action there.

And we're actually through that and one of them and making nice headway in another payments from that perspective is we still have penetration opportunity there, but we've done a really really good job. There. So all of that says <unk>.

Matthew Feierstein: Payments from that perspective, we still have penetration opportunity there, but we've done a really, really good job there. So all of that says, you know, the thesis, you know, we see that thesis come through in terms of the core system of action with value-add solutions add-on. Again, in EverPro, as we think about it, you know, in a place where we have a little bit less of that product consolidation done, it's going to look a little bit different.

We see that thesis come through in terms of core system of action with value add solutions add on again I never pro as we think about it.

In a place where we have a little bit less of that product consolidation done it's going to look a little bit different but what we have done in ever Pro is obviously pro is core in our system to access systems have access solutions, sorry, where we have integrated payments and obviously the majority of our payments integration work has already been done.

Matthew Feierstein: But what we have done in EverPro is obviously, EverPro is a core in our systems of action solutions, sorry, where we have integrated payments. And obviously, the majority of our payments integration work has already been done there from that perspective. So we talked about the EverPro Edge. That will be another value-add solution that, you know, again, as we consolidate products, think about those value-add solutions being more integrated into those systems of action. So hopefully, that gives you a little bit of color.

Done there from that perspective, so we talked about.

The <unk> edge that will be another value add solution that again as we consolidate products think about those value add solutions being more integrated into their systems of action. So hopefully that gives you a little bit of color. We've definitely learned a lot that ever health, but we're not starting from zero from a product consolidation standpoint at Evercore.

Matthew Feierstein: We've definitely learned a lot at EverHealth. But, you know, we are not starting from zero from a product consolidation standpoint at EverPro. We've done that with the value-add solutions already. Thanks, Matt.

So we've done that with the value add solutions already.

Just to add Thats a great question it's for.

Eric Remer: Just to add to that, Alex, that's a great question. It's about, when you think about what we've done with the consolidation for EverHealth, and Matt said it really well, connecting the dots with all those core solutions. For new customer acquisitions, the ARPU has increased 13% year over year. So we are seeing those customers spending more money with us as they utilize more products and services. Got it. That's a great color and a great data point on that. We'll call it GeoLang.

When you think about.

What we've done with the consolidation of our health and Matt said really well connecting the dots with all of those core solutions for new customer acquisition. The <unk> increased 13% year over year. So we are seeing those customers are spending more money with us as it utilizes more products and services.

Got it that's great color and great data point on that the deal. Thanks guys.

Thank you.

Thank you.

As a reminder to ask a question. Please press star one on your telephone.

Eric Remer: Thanks guys. Thank you. Thank you. As a reminder, to ask a question, please press star 11 on your telescope. Our next question comes from Alexey Gogolev with J.P. Morgan. Your line is now open.

Our next question comes from Alexi <unk> list JP.

J P. Morgan your line is now open.

Alexey Gogolev: Hello, everyone. And Eric, thank you for these comments and your prepared remarks about the first steps that you're taking to transform the business. I was wondering if you have any thoughts about what might be the next step? I think Marc outlined that 2024 will be a transition year. Anything you could maybe elaborate on?

Hello, everyone.

Eric Thank you for these comments in your prepared remarks about.

The first steps that you are taking to transform the business.

I was wondering if you have any thoughts about what might be the next step.

I think mark outlined that 'twenty 'twenty four will be a transition year.

Anything you could maybe elaborate on.

Eric Remer: What sort of steps in terms of simplifying the business you may take? Well, thank you for the question. It would be the first step, as you talked about, that Marc brought up in detail, to sell our fitness assets. As we kind of looked at reducing the perimeter of the organization and focus our resources, both people and dollars into investments, into those core solutions that we believe have the largest growth opportunity, that's part of the transformation. We continue to talk about that vertically-focused software solution, focused on helping that service be more successful, so investments in products and go-to-market, and the core verticals that we feel very strong about. And so that's kind of the external. Internally, it's better organizing.

What sort of steps in terms of simplifying the business you may take.

Near term.

Well. Thank you for the question the first step as you talked about with Mark.

Mark brought up in detail with the sale of our fitness assets as we kind of looked at reduced the perimeter of the organization and focus our resources on both people and dollars into investments into those core solutions that we believe that the largest growth opportunity. That's part of the transformation. We continue to talk about that vertical et cetera.

Software solution focused on alphabet service S&P markets. It would be more successful so investments in products and go to market in the core verticals that we feel very strong about and so that's kind of the external internally, it's better organizing the transformation is organizing within within the verticals to make sure that we reduce friction we are.

Eric Remer: The transformation is organizing within the verticals to make sure that we reduce friction, we have better alignment and better products, and a better go-to-market for those customers. If you think about optimization, I mean, that's something we've done very well the last few years, and this is an extension of that. If you think about the last few years, we've increased our margins by almost 700 basis points.

Better alignment and better products and better go to market for those customers. When you think about optimization I mean, that's something we've done very well over the last few years and this is an extension.

The extension of that you think about over the last few years, we increased EBITDA margins by almost 700 basis points and so when you think about our ability to expand those margins.

Eric Remer: And so when you think about our ability to expand those margins, that's the ongoing optimization we see in the organization. And we've actually kind of really doubled down on that in terms of focused on those, not in the low-hanging fruit, but those areas that we see that we can generate more optimization, which is why we've expanded our kind of guide from an EBITDA margin this year as well in Minnesota. That was well said.

Ongoing optimization of the organization and were actually kind of really double down on that in terms of focused on those.

The low hanging fruit, but those are the areas that we see that we can generate more optimization, which is why we've expanded our kind of guide from.

EBITDA margin this year as well.

Marc Thompson: I think, you know, sharpening the focus is all about not just optimizing for the bottom line but also positioning for the top line. Well, actually, particularly in terms of allocating capital across our solutions, I think that, you know, what we're doing and ever helping, which is sort of the leading edge of the wedge, if you will, around brand and product consolidation, we're able to see real efficiency gains, much sharper focus, really starting with the customer and going towards our operations. So, identify the ideal customer profile, work backwards from there, and make sure we're delivering a frictionless set of solutions they need to completely run their business and enhance their workflows, and drive digital payments for other businesses. Thank you. And a follow-up question for Marc. I was wondering how much of a tailwind you have incorporated from Everpro Edge and from the Kickstarter acquisition in the 2024 guide. Did you say, "Tailwind"?

But that was well said I think.

The sharpening the focus is all about not just optimizing for the bottom line, but also positioning for the topline alexi.

Particularly in terms of allocating capital across our solutions I think.

What we're doing in ever health.

Which is sort of the leading edge of the wedge.

Well around branded product consolidation.

To see real efficiency gains a much sharper focus really starting with the customer in towards our operation. So identify the ideal customer profile work backwards from there and make sure we're delivering customer frictionless set of solutions they need to completely run their business.

Hence their workflows drive digital payments for other business et cetera.

Thank you.

Follow up question for Mark.

I was wondering how much of a tailwind have you incorporated form.

However.

And from the <unk> acquisition and the 2020 for guidance.

Marc Thompson: They're quite great, I'm assuming. Yeah. Well, Kickstart, as you may recall, is a very small tuck-in acquisition, and it is baked into the guide to be candid. It's not a needle mover in and of itself.

Did you say tailwind.

Okay.

Very preliminary I'm, assuming yes.

Well <unk> as you may recall is a very small tuck in acquisition.

It is baked into the guide to be candidates not a needle mover in and of itself.

Eric Remer: That's what we described when we talked about the acquisition. In terms of Everpro Edge, it started from a base of zero in the middle of last year. We've grown it very nicely in really what's been six to nine months. I think we've got more than 7,000 customers using that. It's a very high-margin opportunity. It's still early days there, Alexei, but we also do have that built in

What we've described and we talked about the acquisition in terms of ever pro edge started from a base of zero.

That all of last year.

Brought it very nicely.

What's been six to nine months I think we've got more than 7000 customers using that it's a very high margin opportunity.

It is still early days, there I'll actually but we also do have that built into our guidance. So when you think about really as we build that momentum the opportunity of our correct.

Marc Thompson: So Alexa, when you think about really, as we build that momentum, the opportunity for our pro ads, even though it's relatively small, the reason we bring it up, the opportunity to expand into multiple additional solution sets, as well as bring in additional products. So, so far, right now, we're selling really into one solution with one product. So, as we look to expand that again throughout twenty four, I think we'll see an acceleration in terms of real needle mover revenue potential into twenty five versus twenty four, where we're still making those investments into the solution set. Thanks very much.

Even though it's relatively small the reason to bring it up the opportunity to get scanned in multiple.

<unk> solution set.

As well as bringing additional products. So far right now we are selling really into one solution with one product. So as you look to expand that again throughout 'twenty. Four I think we will see the acceleration in terms of <unk> revenue potential into 25 versus <unk> 24, we're still making those investments into the into the solution set.

Thank you very much.

Marc Thompson: Thank you. One moment for our next question. Our next question comes from Mason Marion with Jeffreys. Your line is now open. Hi, thanks for taking the questions today.

Thank you one moment for our next question.

Yeah.

Our next question comes from Mason Marion with Jefferies. Your line is now open.

Alright, thanks for taking the questions today.

Mason Marion: So payments continue to grow well. Thinking of this more from a macro perspective, if you look at it kind of like on a TPV per customer basis, what trends are you seeing there? Are your individual customers reducing spend on average?

Payments continue to grow well.

Is it more from a macro perspective, if you look at it kind of TBD per customer basis. What trends are you seeing there are you are your individual customers reducing spend on average are you seeing any signs that perhaps there could be some.

Matthew Feierstein: Are you seeing any signs that perhaps there could be some inflection going forward? You know, I appreciate the question. Obviously, seasonality across our different sectors does impact that, but we don't see anything out of the normal in terms of that.

Selection going forward. Thank you.

Yes, I appreciate the question, obviously, that's something that we track closely obviously seasonality across our different sectors does impact that but we don't see anything out of the normal in terms of that and obviously, that's a focus for us growing TPB per customer is something that is.

Matthew Feierstein: And obviously, that's a focus for us. Growing TPP per customer is something that, you know, is one of the core growth levers in our payments program. So, you know, exogenously, nothing outside of seasonality that we see from an impact as we head into, finish Q1 and head into Q2. And that is a real lever for us to continue to push on from a customer success standpoint, to continue to expand our customers' revenue through payments expansion. All right, thank you.

As one of the core growth lever growth levers in our payments program. So.

No no no nothing outside of seasonality that we see from an impact as we head into finished Q1 at heading into Q2 and that is a real lever for us to continue to push on from a customer success standpoint to continue to expand our customers.

Revenue repayments expansion.

Alright, thank you.

Mason Marion: Thank you. One moment for our next question, and our next question comes from Clark Jeffries with Piper Sandler. Your line is now open.

Thank you one moment for our next question.

And our next question comes from Clarke Jeffries with Piper Sandler Your line is now open.

Bradley W. Korch: Hello, thank you for taking the question. First, I have a question on the residual assets in the wellness portfolio. How are you viewing those assets between fitness and wellness, the remaining wellness assets? Maybe any kind of color on what those assets are now? And then a second question is, Marc, you know, it seems like the progression of adjusted EBITDA and unlevered or levered free cash flow has been pretty consistent. They are kind of in lockstep with each other.

Hello. Thank you for taking the question first is the question on the residual assets into wellness portfolio. How are you viewing viewing those assets between the fitness and wellness that remaining wellness assets.

Maybe any kind of color on what those assets are now and then a second question is mark it seems like the progression of adjusted EBITDA and Unlevered or Levered free cash flow has been pretty consistent.

Eric Remer: Do you expect that to continue in the coming year? Yeah, thanks so much for the question. I'll start with the first one.

Being in lockstep with each other do you expect that to continue in the coming year. Thank you.

Yes. Thanks, so much for the question I'll start with the first one yes.

Eric Remer: The assets remaining in Everwell are really focused on salons and spas, which, unlike the fitness industry, came right back when COVID kind of ended for all intents and purposes. We saw specifically in salons, when a state would turn back on that you could go to a salon, it went back up to a hundred percent. So, we really like those assets we have there. We have two main assets, one timely, and the other one salon biz. Timely is kind of our global solution, where the salon biz is more domestic.

You mean in <unk> are really focused on salon, and spa, which unlike the fitness they came right back when COVID-19.

With the Covid kind of.

I did for all intensive purposes, we saw specifically in.

Salons.

State with turned back on that you can go to a slide it went back up to 100%. So we really like those assets.

So there we have two main assets one time lead the other one slot as timely as kind of our our global solution, where salon business is more domestic really great solutions with both really great growth rates, we continue to invest in both of those both new customer.

Eric Remer: Really great solutions with really great growth rates. We continue to invest in both of those, both new customer acquisition as well as integrated payments. So we're excited about the category, and we think that category has got a long runway of growth in front of us. To the question on adjusting EBITDA pre-cash flow generation, I mean, yeah, this has obviously been a primary focus all year.

Acquisition as well as integrated payments. So we're excited about the category and we think that category is that long long runway of growth in front of us.

So the question on <unk>.

Adjusted EBITDA and free cash flow generation and yes. This has obviously been a primary focus all year.

Marc Thompson: We felt like we committed to that for our board and our investors coming into 23. We feel very good about our performance in terms of driving efficiency into the business and optimizing our business, as well as driving and improving scalability in the operation to better position us for growth down the road. So everything that we began and continued to do through the year of 23, we sort of doubled down on that, if you will, through the transformation optimization initiatives that Eric mentioned. Obviously, driving efficiency on that bottom line really relates as much to the optimization initiatives as it does to the transformation side.

We felt like we committed to that so our board and our investors coming into 'twenty three we feel very good about our performance in terms of driving efficiency into the business and optimizing our business as well as driving and improving scalability in the operation to better position us for growth down the road. So everything that we began and continue to do.

Do through the year of 2003, we sort of doubled down on that if you will through the through the transformation optimization initiatives that Eric mentioned within.

Driving efficiency on the Bottomline really relates as much to the.

Optimization as it does for the transformation side.

Marc Thompson: But as we continue to sharpen our focus, consolidate our operations around brands and products, invest appropriately, and drive more scalability, and have identified a pretty long list of a variety of different initiatives that we can do to continue to drive efficiency into the business, I think you see that reflected in the guide forward, don't you? I mean, we're committing to driving increased profitability this coming year. And I think, you know, harking back to kind of our thoughts on the mid and long term when we took the business public, we always felt very good about our ability to drive operating leverage through the business as we drove scale. And as we got over the hump, particularly, of a lot of investments we needed to make as we went public and then began operating as a public company. So a lot of work we're very focused on here at 24 and beyond over the next, you know, really one to two years to continue to grow into that motion. I really appreciate it. Thank you very much.

But as we continue to sharpen our focus consolidate our operations around brands and products invest appropriately and drive more scale ability and have identified.

A pretty long list of.

Alrighty of different initiatives that we can do to continue to drive efficiency into the business I think you'll see that reflected in the guide for <unk>, maybe we're committing to to driving increased profitability. This coming year, and I think harking back to kind of our thoughts on the mid and long term. When we took the business public we always felt very good about our ability to drive operating leverage through the business as we.

Drove scale.

As we got over the hump, particularly have a lot of investments we needed to make as we went public and then began operating as a public company. So.

A lot of work and we're very focused on here in 'twenty four and beyond over the next really wants to two years to continue to grow into that motion.

I appreciate it thank you very much.

Daniel Robert Bergstrom: Thank you. One moment for our next question. Our next question comes from Dan Bergstrom with RBC Capital Markets, your lines Noah. Hey, it's Dan Bergstrom from Matt Hedberg.

Thank you.

Our next question.

Our next question.

Comes from Dan Bergstrom with RBC capital markets. Your line is now open.

Daniel Robert Bergstrom: Thanks for taking our question. Just on payment adoption and an earlier question, I know you tried out some different strategies to drive payment adoption last year with mandates, etc. Is there anything that you really learned from that testing that you're leaning on more and 24 here to drive payment adoption? Yeah, great question.

Hey, it's Dan Bergstrom for Matt Hedberg, Thanks for taking our question.

Just on payment adoption in an earlier question I know you tried out some different strategies to drive payment adoption last year with mandates et cetera is there anything that you really learn from that testing that you are leaning on more than 24 here to drive payment adoption.

Matthew Feierstein: Thanks for the follow-up on that. Absolutely, we've tested mandates across multiple solutions, and certainly learned a lot in terms of, you know, what percentage of uptake we got on those mandates, and how to position the mandates. And, you know, we've actually pulled that forward into, you know, how we think about the, you know, using similar tactics in 2024. Obviously, there's a variety of different things that we are thinking of from a payment attached standpoint. Obviously, it goes beyond mandates; it goes to pricing, packaging, etc.

Yes.

Great question. Thanks for the follow up on that absolutely we've tested mandates across multiple solutions.

Certainly learned a lot in terms of.

What percentage of uptake, we got on those mandates how to position the mandates.

And we've actually pulled that forward into how we think about you.

Using similar tactics in 2024, obviously, there is a variety of different things that we are thinking from a payment attach standpoint, obviously it goes beyond mandates that goes to pricing packaging.

Matthew Feierstein: And so, you know, definitely, we're obviously, everything we do going forward is a function of what we've learned. We're very test and learn focused and picked up a bunch of points from those mandates that we'll be driving forward in 2024. That's great. I appreciate the color.

Et cetera, and so.

Yes, definitely we're obviously everything we do going forward as a function of what we've learned we're very test and learn focused and did pick up a bunch of points from those mandates that will be driving forward in 'twenty four.

Daniel Robert Bergstrom: Then maybe for Marc, again, to build off a previous question on the guidance range for 24. Maybe what are some of the underlying assumptions or what could work well that could push results, say, towards the upper end of the range? Well, I think... A few things. Obviously, on the top side of things, continuing to invest in our core strategies within our core solutions, systems of action, and integrating payments and things like EverPro Edge, new add-on features that can drive both growth and profitability and, frankly, improve retention. I mean, our investments we make year over year are always as much about acquiring new customers as they are about investing in our ability to expand our customer relationships and also really improve features, functions, remain competitive, and drive improved retention. Obviously, when you sell more than one solution to customers, you drive retention that way.

That's great I appreciate the color and then maybe for Mark again to build off of previous previous question on the guidance range for 'twenty four.

Maybe what are some of the underlying assumptions or what what could work well that could push the results stay towards the upper end of the range.

Well I think a few things.

Obviously on the top side of things continue in that revenue continuing to.

To invest in our in our core strategies within our core solutions systems of action and integrating payments and things like <unk>.

Hedge new add on features that can drive both growth and profitability and frankly improve retention.

Our investments were making year over year.

We're always as much about acquiring new customers as much about <unk>.

Investing in our ability to expand our customer relationships and also really improve features functions remain competitive and drive improved retention, obviously, when you sell more than one solution to our customers and drive retention that way so I think.

Marc Thompson: So I think, you know, a variety of everything we're doing on the investment side in 24, particularly in these higher growth, higher market, higher market opportunities, I think is all geared towards positioning us for upside. So, you know, we're driving the investment dollars in, we're taking the actions, and execution could certainly improve our ability to drive that top line. I do think, as I mentioned, in marketing technology, we are being prudent in our guidance. We do see stabilization, but the world is not in our control.

A variety of everything we're doing on the investment side.

24, particularly in these higher growth higher margin higher market opportunities I think is all geared towards positioning us for upside so.

We're driving the investment dollars that we're taking the actions.

Execution could certainly improve.

<unk>.

Our ability.

To drive that topline I do think as I mentioned, our marketing technology.

We are being prudent in our guide.

We do see stabilization, but.

Marc Thompson: I do think there could always be upside there, and we're certainly well-positioned for that. And I think, as I mentioned earlier, the team has done a really nice job of managing through a really murky environment the last 18 to 24 months. The bottom line, I think we demonstrated this year and really over the last 18 to 24 months, just as we had said, we were going to overcome the hump of the infrastructure costs we needed to make the investments we needed to make to get and be public. I think we've delivered on that and then some, and I think we're positioning ourselves to deliver on that this year with real confidence in building that into our guidance. But obviously, we can't work fast enough to drive more efficiency and scalability of operations into the business, and we're doing that as quickly as we can, but there could be upside there from a variety of different initiatives we have going on internally as we continue to transform and optimize the business this year.

But the world is not in our control I do think there could always be upside there.

Well, certainly well positioned for that and I think as I mentioned earlier. The team has done a really nice job of managing through a really market environment. The last 18 to 24 months on the bottom.

Line.

I think we demonstrated through this year and really over the last 18 to 24 months just as we had said we were going to overcome the hump of the infrastructure costs, we needed to make the investments we needed to make to get be public I think we've delivered on that and then some and I think we're positioning ourselves to deliver on that.

This year with real confidence in building that into our guidance, but obviously, we can't work fast enough to drive more efficiency and scalability of operations into the business and we're doing that as quickly as we can but there could be upside there from a variety of different initiatives, we have going on internally as we continue to.

Marc Thompson: And just to add to that, when you think about some of the opportunities that, you know, we continue to work on, that we think will both, you know, drive growth this year as well as into next year, I mean, we have over 700,000 customers, you know, over 350,000, you know, field service contractors, almost 100,000, you know, practitioners in EverHealth, we have a massive amount of small business customers that utilize our core solutions to run the And, you know, fortunately, that's a very large number. So it'll give us a lot of things, a lot of runway to grow with. But those are the things that we focus on every day.

Transform and optimize the business this year and next.

And just to add to that when you think about some of the opportunities that we continue to work on that we think will both drive across the upper half of this year as well as into next year. I mean, we have over 700000 customers over 350000, Cockfield service contractors almost 100000 practitioners in the upper helped balance amount.

Small business customers that utilize our core solutions to run the business every day, our opportunity to provide more value to them through additional services products and solutions, we are still in the.

Early innings of that.

Fortunately that has a very large base. So it gives us a lot of runway.

Runway to grow it but those are the things that we focus on every day, how do we provide more value to those customers. Obviously it makes them more successful and provides more revenue that for commerce.

Eric Remer: How do we provide more value to those customers, obviously making them more successful and providing more revenue to Evercommerce. Thank you. I'm showing no further questions at this time.

Thank you.

Thank you.

I'm showing no further questions at this time I would now like to turn it back to Eric <unk> for closing remarks.

Eric Remer: I would now like to turn it back to Eric Remer for closing remarks. Well, I appreciate everyone joining the call today. Evercommerce continues to balance growth and profitability.

Well I appreciate everyone joining the call today every commerce continues to balance growth and profitability and as we said several times as we look forward to 2024 I am very excited to continue the implementation of our transformation and optimization initiatives.

Eric Remer: And as we've said several times, as we look forward to 2024, I'm very excited to continue the implementation of a transformation and optimization initiative that will both accelerate growth while expanding our margins. So, thank you guys so much for joining us today. This concludes today's conference call. Thank you for participating. You may now disconnect.

Celebrate growth, while expanding our margins. So thank you guys. So much for joining today.

This concludes today's conference call. Thank you for participating.

You may now disconnect.

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Okay.

Okay.

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