Q2 2024 EverCommerce Inc Earnings and Bussiness Update Call

August 6, 2024

Bradley Korch: Statements made on this call and in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements, except as required by law.

And contained in the earnings materials available on our website that are not historical in nature may constitute forward looking statements.

Such statements are based on the current expectations and beliefs of management.

Actual results may differ materially from these forward looking statements due to risks and uncertainties that prescribing more detail in our filings with the SEC.

Undertake no obligation to publicly update or revise these forward looking statements except as required by law.

Bradley Korch: We will also refer to certain non-GAAP financial measures to provide additional information to you, our investors. A reconciliation of non-GAAP-to-GAAP historical measures is provided in both our earnings trust release and our earnings call freeze. Before we discuss second quarter results, I would like to once again highlight the presentation of results and KPIs included in the earnings call slides and our prepared comments. As discussed last quarter, we announced the sale of our four fitness industry solutions in early March. The sale of the two North American solutions closed simultaneously with the deal signing on March 13th, and the two international solutions closed on July 4th.

We will also refer to certain non-GAAP financial measures to provide additional information to you our investors a reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation.

Before we discuss second quarter results I would like to once again highlight the presentation of results and Kpis included in the earnings call slides and our prepared comments.

As discussed last quarter, we announced the sale of our four fitness industry solutions in early March the sale of the two North American solutions closed simultaneous with deal signing on March 13th and the two international solutions closed on July one.

Bradley Korch: Our GAAP results include the two North American solutions through the date of closing, although two international solutions are held for sale and will continue to be reported under results of operations through the second quarter of 2024. As a result, revenue growth rates are affected by the sales of North American. Operational metrics such as customer count TPV, and customers enabling more than one solution that we will discuss today have all been adjusted to exclude the fitness solutions on a pro forma basis. I will now turn it over to our CEO, Eric Remer, please. Thank you, Brad.

Our GAAP results include the two North American solutions through the date of closing, although two international solutions are held for sale and continue to be reported in our results of operations through the second quarter of 2024.

As a result revenue growth rates are affected by the sale of the North American assets.

Eric Remer: On today's call, I will highlight second quarter 2024 results, and dive into some key customer trends. We'll discuss some case studies on our customer payment options and provide an update on our transformation and optimization initiatives before turning the call over to Marc to dive deeper into our financials. Tune in to our second quarter highlights, our reported revenue exceeded the top end of our guidance range with growth of 4.3% year over year. For the former revenue growth, which excludes the North American fitness assets sold in March was 6%, adjusted even to a $41.2 million beat the midpoint of our guidance, representing the 23.2% margin. Just even the margins expanded modestly year over year despite the investments made. Payments revenue, excluding fitness solutions, grew 8% year-over-year, driven by our 8.4% growth in TPV.

Eric Remer: Driving payments and options continues to be a key element of our strategy, one that I will highlight with some case studies in a few moments. In the second quarter, our board also increased our share repurchase authorization by $50 million and extended the program to the end of 2025. In the second quarter, we repurchased approximately 2.5 million shares for $24.1 million, bringing our total repurchase since the inception of our buybacks in mid-2022 to 15.6 million shares. As of the end of the second quarter, we had approximately $54 million remaining to authorize.

Eric Remer: Evercommerce provides SaaS solutions for the service SMB economy. We offer tremendous value to our customers by providing solutions tailored to the unique workflows and interactions the various services require. Our software solutions not only provide the system of action necessary to run the daily business process but also the marketing solutions to attract customers, Billionaire Payment Solutions to collect payments effortless, and the customer experience solutions to create a predictable and convenient experience. Our solutions are cost-effective, easy to implement, and purpose-built for the service business.

Eric Remer: We provide end-to-end solutions that our more than 690,000 customers need to compete and grow in a marketplace that is rapidly transforming. Excluding North American fitness solutions we've sold and including our kick serve acquisition, we ended the quarter with $682 million in LTM revenue, representing 7% growth. With a focus on balanced profitability, we generated 24.1% adjusted unit dimmersion on an LTM basis. Finally, we crossed over the $12 billion mark of annualized total payment volume, or PPV, a key metric for not just payment adoption but for growth and profitability.

Eric Remer: We report our progress and payments adoption quarterly as the key measure of our land and expanse strategy. We land with a core business management software that upsells and cross-sells additional features, services, and products, leading with payments, our most mature cross-sell motion. This enhances the value that our customers receive from the relationship with Evercommerce and drives additional revenue. At the end of the second quarter, 199,000 customers were able to use more than one solution, reflected a 25% year-over-year growth.

Eric Remer: As we discussed when we introduced this metric, enabling customers to use more than one solution is the first step in the funnel that leads to increased revenue, retention, and ultimately profitability for these customers. Once customers are enabled, the next action for us is to help facilitate their use. In the case of payments, this entails getting our customers to actively process payments on our platform. We measured this step in the funnel of utilization. At the end of the second quarter, approximately 87,000 customers were actively utilizing more than one solution, reflecting 60% year-over-year growth.

Speaker Change: Strong net revenue retention looking.

Eric Remer: Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, for core software payment solutions was 97%. While this is down slightly on a sequential basis, a major driver here was the anniversary of a price increase in one of our high-velocity, lower ARPU solutions, and not a measurable change in our customer trend. Embedded payments is a highly accretive cross-sell opportunity and is a key component of Evercommerce's growth strategy. Year over year, our payments revenue, excluding the fitness solutions, grew 8%.

Looking back over the trailing 12 months, our annualized net revenue retention are at our core software and payment solutions. It was 97%.

While this is down slightly on a sequential basis, a major driver here was the anniversary of price increase in one of our high velocity lower RPT solution and not a measurable change in a customer churn dynamics.

Speaker Change: Embedded payments is the most accretive cross sell opportunity and is a key component of ever commerce with growth strategy.

Speaker Change: Year over year, our payments revenue, excluding the fitness solutions grew 8%.

Eric Remer: County for Prospects with 17% of overall revenue. We report our payments revenue on that basis. And as a result, payment revenue contributes approximately 95% of gross margin, that's a meaningful contributor to overall adjusted EBITDA margin. Second quarter estimated annual total payments volume, or TPV, was approximately $12.1 billion, representing 8.4% year over year growth.

Speaker Change: County for approximately 17% of overall revenue.

Speaker Change: We report our payments revenue on net basis and as a result payment revenue contributes approximately 95% gross margin as a meaningful contributor to overall adjusted EBITDA margin.

Speaker Change: Second quarter estimated annual total payments volume of TPB was approximately $12 1 billion reps.

Speaker Change: It represented eight 4% year over year growth.

Eric Remer: We continue to invest in and actively manage our onboarding programs to accelerate payment adoption, which we believe can accelerate payment revenue growth. These payment and cross-sell enabled metrics emphasize the good progress we are making, but we are still very much in the early innings of the story. To illustrate the impact, continued progress can happen, we want to walk through two case studies, one on payments adoption and a second regarding the growth opportunity of our newly launched EverPro Edge subscription adopter.

Speaker Change: T to invest and actively manage our onboarding programs to accelerate payment adoption, which we believe can accelerate payments revenue growth.

Speaker Change: These payment and cross sell enabled metrics emphasize the good progress we are making but we are still very much in the early innings of the story.

Speaker Change: To illustrate the impact continued progress can have on our business, we want to walk through two case studies, one on payments adoption and a second regarding the growth opportunity, but newly launched epic pro edge subscription adoption.

Speaker Change: Starting with the payments adoption at <unk>, which is our salon and Spa software that's focused on the new deal in Australia and UK market.

Eric Remer: Starting with the payments adoption of Timely, which is our salon and spa software that's focused on the New Zealand, Australian, and UK market, kindly the full service system of action software to allow salon owners to manage customer appointments, inventory, stylist scheduling, and, of course, take payments. When we acquired this solution in late 2021, Hynes' initial use of case payments was for taking appointment deposits via the web.

Eric Remer: While this provided a much-needed service for our customers, in these markets, appointment deposits are as common as restaurant reservation deposits that have become common in the US, did not allow for our customers to make payments for all their. What our customers really needed was a point of sale solution that could be used within the salon to capture payments for salon services, like hair cuts, and products sold in the store as well as invest in it to make that happen.

Eric Remer: We developed features within our software to handle these payments. We partnered with a new provider to offer point of sale terminals in salons. Given the nature of our SMB-focused business, these terminals needed to be self-provisioning and easy to use out of the box.

Eric Remer: After completing this new integration and ironing out the kinks of the point-of-sale device enablement, we've seen our TPV approximate double in just over a year. This is driven by both average annualized TPV per active process and customer growth over 50% and growth in customers enabled for payments processing from 41% to 52% of customers over the same time period. Our second case study is Everpro-Ed. In the second half of 2023, we introduced our new Everpro Edge solution for existing joints. As we discussed at our March earnings call, EverPro Edge is a new solution that provides customers the opportunity to save, learn, and grow, create a community, and trust your brand for engagement.

Eric Remer: Everpro Edge provides the opportunity for our customers to engage with educational content to help them improve their operations, as well as earn cashback rebates at leading vendors where they may already be purchasing. Since the introduction of Edge, we have seen Joyce customers that join Edge grow their overall ARPU by approximately three times. Given that the rebate portion of the edge is nearly 100% margin, this ARPU growth also translates to significant margin expansion.

Eric Remer: Edge also hinted at the value of these customers gained from the Evercommerce relationship, and the rebates received can, in some cases, offset the cost of the software broker. This is a true win-win and something we think can help us better grow and retain.

Eric Remer: A key component of our growth acceleration strategy is our transformation optimization program, about what you would like to provide at QuickUp. During the quarter, we made significant progress against a multi-quarter program. On the optimization side, we continue to validate saving opportunities, looking to consolidate spend across vendors and, in some cases, reimagine how we allocate resources. Our transformation initiatives continue to align our business around the EverHealth and EverPro customer versions, ultimately giving these business units the organizational structure and support they need to accelerate growth.

Eric Remer: This includes simplifying our organizational structure and decommissioning legacy brands, as well as investing in key sales and go-to-market gaps that impact their growth. During the quarter, we made some key sales and market leadership hires that are integral steps to achieving the vision. We also launched our first-ever professional website that begins to consolidate those product brands in the same fashion we discussed with EverHealth in the past.

Eric Remer: We've also begun to invest in common, company-wide systems that will increase operational efficiencies. We are doing the work now that we believe will enable us to accelerate growth to both enhance customer acquisition and improve cross-sell capabilities and, ultimately, also drive better profitability. In the coming months, we expect to have additional new and exciting announcements as we continue to drive our transformation journey. Before I turn the call over to Marc, I'd like to quickly comment on the announcement we made today in conjunction with the earnings release. This afternoon, we announce the appointment of Ryan Surek as Evercommerce's new chief financial officer, effective September 6th.

Eric Remer: Ryan joined Evercommerce a little over a year ago as its chief accounting officer, and working closely with him over the last year, it has become clear that he has both the skills and the drive necessary to help us lead Evercommerce's next phase of development. This is a bittersweet announcement, though, as I'm excited to see Ryan step into this role.

Marc Thompson: I'll miss working with Marc, who's been a strong partner to me and the Evercommerce leadership team over the past eight years. Now I'll pass it over to Marc, who will discuss our financial results in more detail, as well as discuss third quarter and full year 2024 guidance. Thanks, Eric.

Marc Thompson: Total reported revenue in the second quarter was $177.4 million, up 4.3% from the prior year period and exceeding the top end of our guidance rate. This is also the highest quarterly revenue on record. Within total reported revenue, subscription and transaction revenue was $137 million, up 5.2% from the prior year period, and revenue for marketing technology solutions was $35 million, up 1.6% from the prior year period. We manage the business for sustainable organic growth and selectively utilize strategic acquisitions to augment the trajectory of this growth.

Marc Thompson: As a result, we believe it's important for investors to evaluate our business growth on a pro forma basis, which is how we measure and manage the business internally. We calculate our pro forma revenue growth as though all acquisitions and divestitures closed as of the end of the latest period were closed as of the first day of the prior year period, including before the time we completed the acquisition or divestiture. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business.

Marc Thompson: For the second quarter of 2024, year over year pro forma revenue growth was 6%, while year over year pro forma subscription and transaction revenue growth was 7.3%. The solid performance and subscription and transaction revenue growth were largely due to continued execution of our growth strategy to provide customers with our core system of action software solutions and driving expansion by promoting cross-sell and up-sell opportunities, leading with payment. While we believe that our marketing technology solutions are stabilizing amidst continuing headwinds, their results negatively impacted consolidated revenue growth in the second quarter. Additionally, as Eric noted, we also exceeded the midpoint of our Adjusted EBITDA guidance range.

Speaker Change: As Eric noted, we also exceeded the midpoint of our adjusted EBITDA guidance range second quarter. Adjusted EBITDA was $41 2 million, representing a 23, 2% margin versus 22, 8% in the second quarter of 2023, and six 2% growth in adjusted EBITDA year over year.

Marc Thompson: Second quarter Adjusted EBITDA was $41.2 million, representing a 23.2% margin versus 22.8% in the second quarter of 2023, and 6.2% growth in Adjusted EBITDA year over year. During the quarter, we were able to expand margins on a year-over-year basis while investing in the business, including making certain transformation-related investments that are described. This quarter's adjusted EBITDA performance notably does not include a material amount of optimization savings, which we expect to start having a more measurable impact in 2025 and beyond.

Speaker Change: During the quarter, we were able to expand margins on a year over year basis, while investing in the business, including making certain transformation related investments are described.

Speaker Change: This quarter's adjusted EBITDA performance, notably it does not include a material amount of optimization savings, which we expect to start having a more measurable impact in 2025 and beyond.

Speaker Change: Adjusted gross profit in the quarter was $116 1 million, representing an adjusted gross margin of 65, 4% versus 65, 8% in Q2 2023.

Marc Thompson: Adjusted gross profit in the quarter was $116.1 million, representing an adjusted gross margin of 65.4% versus 65.8% in Q2 2023. The slight decrease in gross margin on a year-over-year basis was largely due to the timing of revenue and cost of goods sold within the marketing technology solutions and not an indication of change within the core SaaS business. Now I'll turn to adjusted operating expenses, which are reconciled in the appendix to this presentation.

Speaker Change: A slight decrease in gross margin on a year over year basis was largely due to the timing of revenue and cost of goods sold within the marketing technology solutions and not an indication of change within the core SaaS business.

Speaker Change: Now I will turn to adjusted operating expenses, which are reconciled in the appendix to this presentation.

Marc Thompson: Overall, adjusted operating expenses declined from 43% to 42% in the quarter, underscoring our focus on profitability as we scale and grow the business. Adjusted sales and marketing expenses were $28.8 million, or 16.2% of revenue, down from 16.9% of revenue reported in the prior year period. Adjusted product development expense was $19.6 million, or 11% of revenue, up from the 10.4% reported in the prior year period, largely due to planned investments and maintenance in our product.

Speaker Change: Overall, adjusted operating expenses declined from 43% to 42% in the quarter underscoring our focus on profitability as we scale and grow the business.

Speaker Change: Adjusted sales and marketing expense was $28 8 million or 16, 2% of revenue down from 16, 9% of revenue reported in the prior year period.

Speaker Change: Adjusted product development expense was $19 6 million or 11% of revenue up from the 10, 4% reported in the prior year period, largely due to planned investments in maintenance and our products.

Marc Thompson: Adjusted G&A expenses $26.5 million, or 14.9% of revenue, down from 15.7% of revenue in the prior year period. Adjusted G&A expenses declined both as a percent of revenue and in absolute dollars as we continue to optimize our operation. We continue to generate significant free cash flow as we invest to grow our business. Cash flow from operations for the quarter was $23.9 million as compared to $28.4 million in the prior year comparative quarter.

Speaker Change: Adjusted G&A expense was $26 5 million or 14, 9% of revenue down from 15, 7% of revenue in the prior year period.

Speaker Change: Adjusted G&A expenses declined both as a percent of revenue and in absolute dollars as we continue to optimize our operations.

Speaker Change: We continue to generate significant free cash flow as we invest to grow our business cash flow from operations for the quarter was $23 9 million as compared to $28 4 million in the prior year comparative quarter.

Marc Thompson: Leverage-free cash flow was $19 million in the quarter, down approximately $3.6 million, or 16% year-over-year, and was negatively impacted by the timing of working capital changes. For the trailing 12 months, leveraged free cash flow was $78.5 million, which represents an 11.4% margin and a 26.2% increase in leveraged free cash flow over the prior year, continuing to underscore the efficiency of our business and enhancing our balance sheet flexibility. Adjusted for leverage, free cash flow was $30 million in the quarter and $121 million for the last 12 months, representing 11% and 22.7% year over year growth, respectively.

Speaker Change: Levered free cash flow was $19 million in the quarter down approximately $3 6 million or 16% year over year and was negatively impacted by the timing of working capital changes.

Speaker Change: For the trailing 12 months Levered free cash flow was $78 5 million, which represents a 11, 4% margin and a 26, 2% increase in Levered free cash flow over the prior year continuing to underscore the efficiency of our business and enhancing our balance sheet flexibility.

Speaker Change: Adjusted Unlevered free cash flow was $30 million in the quarter and $121 million for the last 12 months, representing a 11% and 22, 7% year over year growth respectively.

Speaker Change: Strong free cash flow generation is the deliberate goal for the ever commerce seeing because it enables a flexibility to invest in our growing business, while also enabling us to efficiently allocate capital across the spectrum of opportunities, including the outstanding buyback authorization of M&A prospects in the second quarter, we repurchased approximately $2.

Marc Thompson: Strong free cash flow generation is a delivered goal for the evercommerce team as it enables the flexibility to invest in our growing business while also enabling us to efficiently allocate capital across a spectrum of opportunities, including the outstanding buyback authorization and M&A prospects. In the second quarter, we repurchased approximately 2.5 million shares for a total cash consideration of approximately $24.1 million at an average price of $9.57 per share. Due to the board's increased authorization, which Eric mentioned, as of June 30, 2024, we had approximately $54 million remaining in our repurchase authorization that runs through year-end 2025. We ended the quarter with $87 million in cash and cash equivalents, and we maintain $190 million of undrawn capacity on our revolvers.

Speaker Change: <unk> 5 million shares for a total cash consideration of approximately $24 1 billion at an average price of $9 57 per share.

Speaker Change: Due to the board's increased authorization that Eric mentioned as of June 32024, we had approximately $54 million remaining in our repurchase authorization that runs through year end 2025.

Speaker Change: We ended the quarter with $87 million in cash and cash equivalents and we maintain a $190 million of undrawn capacity on our revolver.

Marc Thompson: Our debt is a combination of floating and fixed rates, and total net leverage, as calculated per our credit facility at the end of the quarter, was approximately 2.6 times, consistent with our financial policy. We have no material maturities until 2028. I'd now like to finish by discussing our outlook for the third quarter of 2024. For the third quarter of 2024, we expect total revenue of $172 to $176 million, and we expect adjusted EBITDA of $39 to $42 million. We're leaving our full year 2024 guidance unchanged.

Speaker Change: Our debt is a combination of floating and fixed rates 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, we have no material maturities until 2028.

Speaker Change: I would now like to finish by discussing our outlook for the third quarter of 2024.

Speaker Change: For the third quarter of 2024, we expect total revenue of $172 million to $176 million and we expect adjusted EBITDA of $39 million to $42 million.

Speaker Change: We're leaving our full year 2024 guidance unchanged, we continue to expect revenue of $676 million to $696 million and adjusted EBITDA of 167% to $176 million.

Marc Thompson: We continue to expect revenue of $676 to $696 million and adjusted EBITDA of $167 to $176 million. Furthermore, as we said at the beginning of the year, 2024 will be a transition year in which we are making investments to support the transformation and continuing optimization of the business with an eye toward accelerating growth and increasing profitability.

Speaker Change: Our guidance assumes flat year over year revenue trends within our marketing technology services business.

Speaker Change: Furthermore, we note that as we said at the beginning of the year 2024 will be a transition year in which we are making investments to support the transformation and continuing optimization of the business.

Speaker Change: With an eye towards accelerating growth and increasing profitability.

Marc Thompson: To that end, we'll continue to prioritize long-term value creation and seize opportunities to make creative investments as they become actionable. Now, before we begin the question and answer portion of the call, I'd like to take a moment to thank Eric, Matt, our board, and the whole Evercommerce team for the opportunity to serve as CFO for the last seven and a half years. It's been a true pleasure.

Speaker Change: To that end, we will continue to prioritize long term value creation and seize opportunities to make accretive investments as they become actionable.

Eric Matt: Now before we begin the question and answer portion of the call I'd like to take a moment to thank Eric Matt Our board and I'll ever Commerce team for the opportunity to serve as CFO for the last seven and a half years, it's been a true pleasure.

Operator: Well, we've accomplished a lot during this time, and I'm confident that the best is yet to come. Operator, we're now ready to take the first question. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: While we've accomplished a lot during this time I am confident that the best is yet to come.

Speaker Change: Operator, we're now ready to take the first question.

Speaker Change: Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Speaker Change: Our first question comes from Bill Hoffmann Czar of Deutsche Bank. Your line is now open.

Bhavin Shah: Our first question comes from Bhavin Shah of Deutsche Bank. Your line is now open. Great, thanks for taking my questions. And Marc, it's been great working with you. First of all, it looks like marketing technology solutions have kind of returned to year-over-year growth after a couple quarters of decline. How much of that was kind of execution versus macro related? And can you just broadly give us an update on where you're seeing from a macro perspective and kind of what's embedded in the guide? So, Bhavin, I'm not sure that that came through as clearly.

Speaker Change: Great. Thanks for taking my questions and end market has been great working with you.

Speaker Change: First of all just looking at marketing technology solution, it's kind of a return to year on year growth. After a couple of quarters decline how much of that was kind of execution versus macro related and can you just broadly give us an update where you are seeing from a macro perspective and kind of what's embedded in the guidance.

Operator: Could you repeat the second half? I think you were asking about the macro climate and impact on revenue. And then I just didn't catch the second portion.

Speaker Change: So Bob and I am not sure that that came through as crisply could you repeat the second half I think you were asking about macro climate has an impact on revenue and then I just didn't catch the second portion yes. The first one sorry just.

Bhavin Shah: Yeah, the first one, sorry. Did marketing technology solutions kind of return to year-over-year growth after a couple of quarters of year-over-year decline? How much of that was execution versus macro? And then just overall macro, what did you see in 2Q and kind of what's embedded for the rest of the year?

Speaker Change: And marketing technology solutions kind of returned to year over year growth. After a couple of quarters of year over year declines how much of that was execution versus macro and then just overall macro what do you see in <unk> and kind of what's embedded for the rest of the year.

Speaker Change: Got it alright, thank you so.

Marc Thompson: Thank you. So, marketing technology, the 1.6% growth this quarter versus, I think, slightly down quarter over quarter in Q1. You know, I think, look, on the margin, it's a little bit of both.

Speaker Change: Marketing technology, the 1%, one 6% growth this quarter versus I think slightly down quarter over quarter in Q1.

Speaker Change: Look on the margin, it's a little bit of both I think we continue to execute well, but the headwinds remain.

Marc Thompson: I think we continue to execute well, but the headwinds remain. So, I don't really think much has changed. We continue to think we are stabilized. If you add up the two quarters for six months of the year, we're slightly down year over year, which is consistent with our guidance flat for the full year. And in terms of macro trends for the full year, do you want to comment on that? Yeah. Thanks, Bob. And we're not seeing it.

Speaker Change: So I don't really think much has changed we continue to think we are stabilized if you add the two quarters first six months of the year were slightly down year over year, which is consistent with our guide flat for the full year.

Speaker Change: In terms of macro trends for the full year do you want to comment on that thanks, Bob we're not seeing it we check and we kind of positive launching so it really started at the top of the lead funnel all the way down to retention statistics and to date everything thats been fairly stable in terms of seeing any macro trend. So nothing is.

Eric Remer: We check, you know, we're kind of constantly watching this. So, we really started at the top of the lead funnel all the way down to, you know, retention statistics, and, you know, to date, everything has been, you know, fairly stable in terms of, you know, seeing any macro trends. So, nothing has changed in the business from a kind of macro perspective, and that's reflected in the guidance for the rest of the year.

Speaker Change: Change in the business from a kind of macro perspective, and that's reflected in the guidance for the rest of the year.

Speaker Change: It's very helpful. Just one quick follow up it looks like kind of payments revenue grew more in line with TPG growth. This quarter, while previously kind of it's been growing in excess of keeping your growth any reason why they're converting today and kind of how do we think about the relationship of both going forward.

Eric Remer: Just one quick follow-up. It looks like payments revenue grew more in line with PPV growth this quarter, while previously, it's been growing in excess of PPV growth. Any reason why they're converging today and kind of how do we think about the relationship of both going forward? Yeah, thanks, Bhavin. It's Evan.

Speaker Change: Yeah.

Speaker Change: Yeah, Thanks, Bob It's Kevin.

Evan Berlin: Yeah, I would just say, you know, we talked about this last quarter in terms of, you know, taking rate expansion and the control that we have over that from both a pricing perspective to our customers and then our relationships with our processors, which we always work to optimize our costs. We continue to expect that there will be opportunities to expand TPV growth, and ultimately, take rate will kind of take care of itself as we have different program mix and utilization from our customers over a period of time.

Speaker Change: Just say we've talked about this I think last quarter in terms of.

Speaker Change: Take rate expansion in the control that we have over that from boats.

Speaker Change: Our pricing perspective to our customers and our relationships with with our processors, which we always work to optimize our costs.

Speaker Change: We continue to expect that there will be opportunities to expand TBD growth and ultimately take rate will kind of take care of itself.

Speaker Change: As we have different program mix and utilization from our customers over a period of time. So we expect to have continued TBD growth and take rate expansion.

Speaker Change: And optimization over over the long term.

Speaker Change: Thanks, so much for taking my questions.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Matthew Hedberg of RBC capital markets. Your line is now open.

Evan Berlin: So we expect to have continued TPV growth and take rate expansion and optimization over the long term. Thanks so much for taking my question. Thank you. Our next question comes from Matthew Hedberg of RBC Capital Markets. Your line is now open. Hey, guys, this is Mike Richards on for Matt.

Speaker Change: Hey, guys. This is Mike Richards on for Matt. Thanks for taking the question.

Matthew Hedberg: Thanks for taking the question. Maybe on the optimization initiatives, how is that trending relative to your expectations now that we're a couple quarters in, and then maybe with the CFO transition, does anything change here in terms of timeline or where, you know, we're allocating resources and investments? Thanks.

Mike Richards: Maybe on the optimization initiatives, how has that trended relative to your expectations now that we're a couple of quarters and then now maybe with the CFO transition does does anything change here in terms of timeline are aware.

Speaker Change: <unk> resources and investments.

Speaker Change: Yes, I'll start on the on the CFO side I'll, let Matt talk about kind of where we are in the optimization.

Eric Remer: Yeah, I'll start on the CFO side. I'll let Matt talk about kind of where we are in the optimization. The answer is no, nothing changes in terms of our expectations of our continuation in the optimization, as well as the transformation.

Speaker Change: The answer is no nothing changes in terms of our expectations of a continuation on the optimization as well as the transformation.

Matthew Feierstein: Fortunately, you know, Marc has built a really strong organization from top to bottom. And we're very fortunate to have Ryan Surick, who's been serving as CEO for the last year, has that previous experience, and we believe we'll make a very smooth transition and really follow through with all the work that both Marc and the rest of the team have done to kind of put that optimization and transformation, you know, in motion.

Speaker Change: Fortunately Mark has built a really strong organization from top to bottom and we're very fortunate to have Ryan Sarah Coos and serving as a sale for the last year has had previous experience and we believe will make a very smooth transition and really follow through with all the work that both mark and the rest of the team has done to kind of put that optimization and <unk>.

Speaker Change: Formation.

Matthew Feierstein: So in terms of where we are on it, Matt, you want to talk about that? Yeah, I think we focused last year, sorry, last quarter, really highlighting the focus on the Ever Health and the Ever Pro verticals and really giving leaders in these verticals the organizational structure and the support they need to accelerate growth. So things like simplifying our organizational structure, decommissioning legacy brands, investing in key sales and go-to-market gaps, things that have impacted growth rates, obviously, that's where we are focused from a transformation perspective.

Speaker Change: In motion so in terms of where we are on it and that you want to talk about that yeah. I think we focused last year, sorry last quarter really highlighting the focus on the ever health never pro verticals and really giving leaders.

Speaker Change: In these verticals the organizational structure and the support they need to accelerate growth so things like simplifying our organizational structure decommissioning legacy brands investing in key sales and go to market gaps things that have impacted growth rate. Obviously, that's where we're focused from a transformation perspective during the quarter. We continue to work with our third party changed.

Matthew Feierstein: During the quarter, we continued to work with our third-party change management rep to define our next steps. We've made some key hires within those verticals as well. So excited, I think we are where we thought we would be from a transformation perspective. And from an optimization perspective, I think you heard our remarks during the opening of the call. We are also where we expected to be with real impact that we'll see pull through in 25.

Speaker Change: <unk> Rep to define our next steps we've made some key hires within those verticals as well. So excited I think we are where we thought we would be from a transformation perspective and from an optimization perspective, I think you heard our remarks during the opening of the call. We are also where we expect it to be with real impact that we will see pull through and.

Matthew Feierstein: Yeah, just to double-click on that, Eric mentioned a couple of transformation-related expenses that hit this quarter, and that's a little front-end loaded, if you will. We'll start to see the thread through the efficiencies, we believe, in the back portion of the year, and then carry that into 2025. But as I said in my remarks, you know, we haven't seen a lot of that yet.

Speaker Change: 25, yes, just to double click on that Eric mentioned in a couple of transformation related expenses that hit this quarter and that's a little front end loaded if you will we'll start to see the thread through the efficiencies. We believe in the back back portion of the year.

Speaker Change: And then carry that into 2025, but as I said in my remarks, we haven't seen a lot of that yet and really this is all positioning to exit the year into 2025.

Marc Thompson: And really, this is all positioning to exit the year into 2025. Thanks, Seth. Thank you for your time. Thank you. Our next question comes from Ryan MacWilliams of Barclays. Your line is now open.

Speaker Change: Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Thank you our next question.

Speaker Change: Comes from Ryan Macwilliams of Barclays. Your line is now open.

Ryan Macwilliams: Hey, guys. Thanks for taking question and congrats Mark on a great run.

Ryan Macwilliams: Hey guys, thanks for the question and congrats to Marc on a great run. Just to start, I'd love to hear a little more detail on the puts and takes behind your net retention rate in the quarter. It seems like there was a pricing dynamic here on the comp base. And then how should we think about what level NRR should stay at for the rest of the year?

Ryan Macwilliams: Just to start what to hear a little more detail on the puts and takes behind your net retention rate in the quarter. It seems like there was a pricing dynamic here on the comp for <unk>.

Speaker Change: And then how should we think about what level and our debt.

Speaker Change: For the rest of this year.

Speaker Change: Yes.

Marc Thompson: Yeah, you know, from a puts and takes standpoint, I think you heard us mention this. I think when we looked at when you look at the retention dynamics of the business as a whole, we really saw a lot of consistency. From that NRR perspective, obviously, we mentioned it last quarter; it continues to have impact from the anniversary of some larger pricing increases in one of our high velocity but lower ARPU solutions where we just won't see that quantum of pricing increase layered on top this year. So we are seeing the impact of that anniversary, and will likely for another quarter or so.

Speaker Change: From a puts and takes standpoint, I think you heard us mentioned this when.

Speaker Change: When we looked at when you look at the retention dynamics of the business and in whole, we really saw a lot of consistency.

Speaker Change: That enter our perspective, obviously, we mentioned it last quarter. It continues to have impact from it at the anniversary of some larger pricing increases in one of our high velocity, but lower <unk> solutions, where we just won't see that quantum of pricing increase layer on top.

Speaker Change: In this year. So we are seeing the impact of that anniversary.

Marc Thompson: But again, with the stable retention dynamics with our focus on cross-sell and upsell, our expectation is that NRR should stay in the neighborhood that it has been. And obviously, we've talked about the opportunity for that to continue to grow as our efforts from a cross-sell perspective around payments around the edge are further integrated into the base of software customers. We obviously have the opportunity to continue to take that up and north to the places that it has been and beyond.

Speaker Change: And we'll likely for another quarter or so, but again with the stable retention dynamics with our focus on cross sell and up sell.

Speaker Change: Our expectation is that <unk> should stay in the neighborhood that it has been and obviously, we've talked about the opportunity for that to continue to grow as our motions from a cross sell perspective.

Speaker Change: <unk> payments around edge are further integrated into the base of software customers. We obviously have opportunity to continue to take that up and north to the places that it has been in and beyond.

Speaker Change: Thanks, and then for Mark just on the full year revenue guide should.

Marc Thompson: Thanks. And then for Marc, just on the full year revenue guide, should we think about it as for the second quarter, revenue came in above the range, but for the full year, you're taking out the revenue contribution from the international operations as a part of the guide? Or are there other things we should think about in relation to the full year guide?

Mark: Should we think about it as for the second quarter revenue came in above the range for the full year, you're taking up the revenue contribution from international operations as a part of the guide or is there other things we should think about inflation for the full year guide.

Speaker Change: Thanks.

Marc Thompson: Yeah, yeah, Ryan, I mean, the revenue guidance we've given all year doesn't include fitness, full stop. So I think if you look at the press release, we delineated exactly what the fitness contribution was in the quarter. And so that's how you should compare those.

Speaker Change: Yes, Ryan I mean, the revenue guidance the revenue guidance, we've given all year doesn't include fitness full stop so I think if you look at the press release, we've delineated exactly what the contribution was in the quarter and so that's how you should compare those yes for the third quarter and the fourth quarter. It does not include any sense.

Operator: And then, yes, for the third quarter and the fourth quarter, it does not include any. Operator, are we ready for the next question? Yes, thank you. Our next question comes from Alexander Sklar of Raymond James. Your line is now open. Hi, thanks for taking the question. This is Jon. I'm on behalf of Alex.

Speaker Change: Yeah.

Speaker Change: Operator next question.

Speaker Change: Yes. Thank you.

Speaker Change: Our next question comes from Alan Alexander Sklar of Raymond James Your line is now open.

John: Hi, Thanks for taking the question. This is John on for Alex I wanted to start with the cross sell specifically on the multi solution customers can you talk about some of the puts and takes driving the growth. There is still up nicely year on year, but it looks like the net adds sequentially was below recent quarters. So anything you'd flag there may be seasonality or changes in go to market or maybe the cycle was.

Alexander Sklar: I want to start with CrossSell, specifically the multi-solution customers. Can you talk about some of the puts and takes driving the growth there? It's still up nicely year on year, but it looks like the net ad sequentially was below recent quarters. So anything you can flag there, maybe seasonality or changes and go to market, or maybe the sale fitness there, just any color you can provide there. No, you know, I appreciate the question. Thanks. Thanks for that. It certainly is, but I wouldn't call that necessarily seasonality.

Speaker Change: Just any color you can provide there.

Speaker Change: No.

Speaker Change: I appreciate the question. Thanks, Thanks for that.

Speaker Change: It certainly I wouldn't call that necessarily seasonality, obviously, a key focus on payments. We know we have a lot of runway from a cross sell payments cross sell perspective from payments.

Eric Remer: Obviously, a key focus on payments. We know we have a lot of runway from a cross-sell perspective on payments. So, you know, big focus there. You've heard us talk about EverPro Edge.

Speaker Change: So big focus there you've heard us talk about ever pro edge.

Eric Remer: That is, again, another value-add solution that can be cross-sold into our system of action software base. We have our customer experience solutions where, again, opportunity exists, and we are executing on programs to cross-sell those there. So, you know, some of those products are somewhat still early in their life cycle, like Edge. And so the consistency of those, you know, quarter over quarter may not be the right measurement period from that perspective, i.e., for example, you know, we are in Edge.

Speaker Change: That is again another value add solution that can be cross sold into our system of action software basis, we have our customer experience solutions, where again opportunity exists and we are executing on programs to cross sell there those there so.

Speaker Change: Some of those products are somewhat still early in their lifecycle like edge.

Speaker Change: And so the consistency of those.

Speaker Change: Quarter over quarter may not be the right measurement period from that perspective I E. For example, we are in edge. There are two solutions that we've lost it launched this integration with it may take us several more quarters before the next two integrations or launch, but those are in planning and those will be executed so.

Eric Remer: There are two solutions that we've launched this integration with. It may take us several more quarters before the next two integrations are launched, but those are in planning, and those will be executed. So, you know, as we bring more integrated products to market, you know, quarter over quarter growth may not be the best look year over year, but certainly would be the best way to look at it. Okay, that's helpful color there.

Speaker Change: As we bring more integrated products to market.

Speaker Change: Quarter over quarter.

Speaker Change: Growth may not be the best look year over year, certainly what would be the best way to look at it.

Speaker Change: Okay. That's helpful color there and then on the TV CTV growth here I'm curious if you can maybe quantify I think last quarter you guys called out of the top five solution there were trending nearly <unk>.

Marc Thompson: And then on the TPP growth here, I'm curious if you can maybe quantify it. I think last quarter, you guys called out for the top five solutions. They were trending nearly 30% of TPV, I think was driven from those solutions, and that was running 20%.

Speaker Change: 30% of TPB I think was driven from those solutions and that was growing 20% I'm. Just curious can you speak to how that trended there just the amount of growth generated by filing for example.

Speaker Change: Yes.

Marc Thompson: I'm just curious if you can speak to how that has trended there, just the amount of growth generated by those Yeah, the percentage of aggregate TPV remains relatively stable at 28%. It was the same last quarter, and our growth rate of those top five solutions from a TPV perspective was 22% year over year. And that's really in line with what we spoke about last quarter. And, as we spoke then, it still holds true this quarter. That's where the core focus, the core investment from a payments penetration standpoint is in those top five solutions. Thank you very much.

Speaker Change: The percentage of aggregate PPV remains relatively stable at 28%. It was the same last quarter and our growth rate of those top five solutions from a TPU perspective as was 22% year over year and that's really in line with with what we spoke to from from last quarter. Like we spoke then still holds true in this quarter, that's where the core focus.

Speaker Change: The core investment from our payments penetration standpoint is in those top type solutions.

Speaker Change: Thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Nathan Maryanne.

Operator: Thank you. Our next question comes from Mason Marion. Mr. Jeffries, your line is now open.

Speaker Change: Of Jefferies. Your line is now open.

Mason Marion: All right, thanks for taking the questions. First, congrats to you, Ryan, on the promotion, and best of luck to you, Marc. So I'm going to touch on the capital allocation front. You have divested several underperforming assets and have allocated more money to share repurchases. I spoke about your increased focus on streamlining your current operations. We've heard from others that private valuations are starting to rationalize a bit; talk about why this is the right time to focus more internally and allocate capital back into yourselves versus maybe going externally and pursuing more deals. Yeah, thanks for the question.

Nathan Maryanne: Hi, Thanks for taking the questions first congrats to you Ryan on the promotion and best of luck to you Mark.

Nathan Maryanne: So alright, thats on the capital allocation front, though you divested several underperforming assets and have allocate more money to share repurchases you've spoken about your increased focus on streamlining your current operations.

Speaker Change: We've heard from others that private valuations are starting to rationalize a bit.

Speaker Change: Can you talk about why this is the right time to focus more internally and allocate capital back into yourselves versus maybe externally and pursue more deals.

Speaker Change: Yes. Thanks for the question look we're always looking we're constantly worried.

Eric Remer: You know, look, we're always looking, or we're constantly, you know, where you have our pulse on the market. And although there'll be rationalizing, there's still rationalizing from much higher points than we are currently trading. So from a creative standpoint and a value standpoint as to what we think the underlying value of Evercommerce is, we and myself, the managing director, still strongly believe it is a very good investment for shareholders to be investing in the buyback.

Speaker Change: We have our pulse on the market and although there'll be rationalizing Mr. Rationalizing from much higher points then.

Speaker Change: We're currently trading so from an accretive standpoint, and a value standpoint that we think.

Speaker Change: Underlying value of agro Congresses.

Speaker Change: By itself the managing the board still strongly believe it is a very good investment for shareholders to be investing.

Speaker Change: And the buyback. So we will continue to look at things even through our transformation period, if something comes that makes sense economically and we think are accretive to the organization, we will execute on that as well.

Eric Remer: So we'll continue to look at things even through our kind of transformation period. If something comes that makes sense economically, and we think creative, the organization will execute on that as well. Great, and then you highlighted the point of sale traction within timely. Is there an opportunity to bring this technology to other parts of your business or geos? Yeah, absolutely.

Speaker Change: Great and then you highlighted the point of sale traction within timely is there an opportunity to bring this technology to other parts of your business or <unk>.

Speaker Change: Yes, absolutely.

Eric Remer: When we think about the other top solutions that Matt mentioned, we either have point of sale solutions in the market at some level, or we'll be deploying them over the course of the next handful of quarters. So we're in the early stages of those opportunities. But as you pointed out, the timely case studies, a great example, we expect to get nearly 50% of our TPV by the end of the year from point of sale transactions at timely, and there's opportunity to do similar types of efforts in those other top solutions and other parts of our business that have been point of sale enabled for some time.

Speaker Change: When we think about the other top solutions that Matt mentioned, we either have point of sale solutions.

Speaker Change: In market at some level or will be deploying them over the course of the next.

Speaker Change: A handful of quarters. So we're in the early stages of those opportunities but.

Speaker Change: As you pointed out the timely case study is Great example, we expect to.

Speaker Change: We get nearly 50% of our TPB by the end of the year from from point of sale transactions.

Speaker Change: Timely and there's opportunity to do similar types of efforts and in those other top solutions in other parts of our business that have been a point of sale enabled for for some time. So it's a core part of the strategy in terms of.

Eric Remer: So it's a core part of the strategy in terms of driving utilization and share of wallet expansion on a going forward basis. Great, thank you. As a reminder, you can ask a question. You will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: Driving utilization and share of wallet expansion on a go forward basis.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: As a reminder, you can ask a question you will need to press star one one on your telephone and wait for your name to be announced.

Speaker Change: Our next question.

Erinn Kimpton: Comes from Erinn Kimpton.

Speaker Change: Citizens G. JMP your line is now open.

Operator: Our next question comes from Aaron Kimson of Citizens JMP. Your line is now open. Hello?

Speaker Change: Hello.

Speaker Change: Alright, we will take our next caller.

Aaron Kimson: All right, we will take our next caller. Bill McNamara of Evercore ISI, your line is now open. Hi, this is Don on behalf of Kirk.

Speaker Change: Okay.

Speaker Change: Bill Mcmahon Mora of Evercore ISI. Your line is now open.

Speaker Change: Hi, This is Don for Kirk and thanks for taking my question are you guys seeing any increased price sensitivity from small business customers and how do you see pricing as a long term strategy for growth.

Operator: Thanks for taking my question. Are you guys seeing any increased price sensitivity from small business customers? And how do you see pricing as a long-term strategy for? Yeah, sure, I'll start, and others may want to add, you know, I think we've expressed this in past quarters, we look at price from a price to value standpoint. So, we certainly want to, as we continue to enhance the value of the software that we're providing to our end customers, prices are absolutely a lever that we've used in the past, and we'll continue to use in the future, based on that price-to-value ratio.

Speaker Change: Yes, sure I'll start and others may want to add I think we've expressed this in past quarters, we look at price from a price value standpoint. So we certainly want to as we continue to enhance the value of the software that we're providing to our end customers prices is absolutely a lever that we've used in the past and will continue to use.

Operator: To the first part of your question, we've not seen any increased sensitivity from that pricing standpoint; we've got a long history with the multiple solutions that we have with pricing increases in the market. We certainly understand when we do that what the expectations of feedback and or churn might be. And, you know, we watch that data very closely. We've seen no changes, quarter over quarter, year over year, from a sensitivity standpoint with any actions we've taken. Great, thank you for taking my question. Thank you.

Speaker Change: In the future based on that that price to value ratio to.

Speaker Change: So the first part of your question, we've not seen.

Speaker Change: Any increased sensitivity from that pricing standpoint, we've got a long history with multiples with the multiple solutions that we have with pricing increases in the market.

Speaker Change: We certainly understand when we do that what the expectations of feedback <unk> churn might be and we watch that data very closely we've seen.

Speaker Change: No no changes quarter over quarter year over year from a sensitivity standpoint with any actions we've done this year.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Thank you.

Speaker Change: Our next question.

Bill McNamara: Our next question comes from Alexei Gogolev of J.P. Morgan. Your line is now open. Hello, everyone. We talked about some degradation in vendor management programs last quarter and the YouTube Week in Macro. Have you seen any improvements there? Sorry, Alexa, we didn't catch the degradation that you were referring to that we spoke about in the past quarter. Can you repeat that?

Speaker Change: Comes from Alexia <unk> of Jpmorgan. Your line is now open.

Speaker Change: Hello, everyone.

Speaker Change: You talked about some degradation of vendor management programs last quarter.

Speaker Change: Mainly due to weaker macro have you seen any improvement there.

Speaker Change: Sorry, we didn't catch the degradation that you were referring to that we had spoken to in the past quarter can you repeat.

Speaker Change: Hey, gradation of vendor management programs.

Speaker Change: Are you referring to our ever pro edge offering that we launched end of last year, we talked a little bit about it in our Q.

Operator: Degradation of Vendor Management Programs. Are you referring to our EverPro Edge offering that we launched at the end of last year? We talked a little bit about it in our Q1 call, where we continue to see nice traction with that solution. That's part of what we obviously highlighted in Eric's case studies. Okay, or perhaps Yeah, yeah. I was referring to some of the some of the headlines that you've seen in some other places, Matthew Hedberg.

Speaker Change: One call, where we continue to see nice traction with that solution. That's part of what we obviously highlighted in Eric's case studies.

Speaker Change: Okay, perhaps.

Speaker Change: Yes.

Speaker Change: I was referring to.

Speaker Change: Some of the headwinds that you've seen in some other.

Speaker Change: Management programs.

Alexei Gogolev: But in terms of the dynamic that you are seeing in R&D and then sales and marketing, could you talk about how long we should expect to see? Elevate.

Speaker Change: In terms of.

Speaker Change: The dynamic that you're seeing on the R&D and.

Speaker Change: And then sales and marketing side.

Speaker Change: Could you talk about.

Speaker Change: How long should we expect to see.

Speaker Change: The elevated sales and marketing level.

Speaker Change: The conversion process.

Speaker Change: So I think in terms of sales and marketing expense, obviously, we tightly manage that commensurate with growth and really do it's very much part of the balancing growth and profitability motion.

Operator: I think in terms of sales and marketing expense, obviously, we tightly manage that and it's commensurate with growth. It's really doing that. It's very much part of the balancing growth and profitability motion. It has been relatively stable. I expect it to be operating in that range.

Speaker Change: It has been relatively stable I expect it to be operating in that range, having said that.

Marc Thompson: Having said that, you know, the organizational transformation issues we've been referring to that we've been developing into this year, and as we start to execute into the second half, along with some of the optimization initiatives, we do expect that we will continue to get more out of that investment. And, you know, we will continue to drive growth investments where we need to invest in our best solutions or where they offer the best revenue growth opportunities going forward. From a product development standpoint, it's very similar.

Speaker Change: The organizational transformation initiatives, we've been we've been referring to.

Speaker Change: That we've been developing into this year and as we start to execute into the second half along with some of the optimization initiatives. We do expect that we will continue to get more out of that investment.

Speaker Change: And.

Speaker Change: We will continue to drive growth investments, where we need to drive.

Speaker Change: Into our best solutions or wherever they offer the best revenue growth opportunities going forward from a product development standpoint is very similar we're investing obviously not just to keep our <unk> solutions current within the market, but also investing in new solutions.

Marc Thompson: We're investing, obviously, not just to keep our solutions current within the market but also to invest in new solutions, such as EverPro Edge that we talked about at the end of last year and into this year, as well as continuing integrations of payments and so forth and other cross-sell initiatives. So that, we would expect, will also be within a band but, you know, continuing to invest behind growth as we continue to try to reaccelerate that growth profile going into 2025. If I could squeeze in one more,

Speaker Change: Such as ever pro edge that we've talked about.

Speaker Change: At the end of last year and into this year as well as continuing integrations with payments and so forth and other cross sell initiatives.

Speaker Change: So that we would expect we will continue to to also be within a band but.

Speaker Change: Continuing to invest behind growth as we continue to try to reaccelerate that growth profile going into 'twenty five.

Speaker Change: Okay, if I could squeeze one more.

Speaker Change: Where would you say you are in the adoption curve for different customer groups in terms of payments.

Eric Remer: Where would you say you are on the adoption curve for different customer groups in terms of payment? Obviously, on this goal, you've again highlighted Sloan from Kroners, but I'm just curious, how you're driving attachement in your other Yeah, listen, it depends on the vertical. And it certainly depends on the solution within that. In certain places, we are further along the maturity of that based on the micro vertical and just the long term, you know, necessity of payments in the workflow.

Speaker Change: Obviously on this call we again highlight that.

Speaker Change: <unk>, but just curious on how you are driving attach other vertical.

Speaker Change: Yes.

Speaker Change: It depends on the vertical and it certainly depends on the solution within that.

Speaker Change: Certain places we are further along the maturity of that based on.

Speaker Change: The micro vertical and the just a long term necessity of payments and the workflow. So if you look at dust control software. For example, we have law that has long been embedded in the solution of the assistant action software solution as a core part of the workflow.

Eric Remer: So if you look at test control software, for example, we have long that has long been embedded in the solution of the system of action software solution as a core part of the workflow. And it's a requirement from that end contractor. And you know, penetration is definitely more on the mature side.

Speaker Change: It's a requirement from that end contractor.

Speaker Change: <unk> penetration is definitely more on the mature side.

Eric Remer: You can compare that to other places where we're still really early on in the maturity curve; this could be a place where we have introduced payments to that workflow in software within the last one to three years. And we're still ramping those penetration efforts. So it varies across the portfolio, and our management to that is really system of action software solution specific. Thank you very much. Our last question comes from Aaron Kimson of Citizens JMP. Your line is now open.

Speaker Change: Compare that to other places, where we're still really early on in the maturity curve this could be.

Speaker Change: Place, where we have introduced payments to that workflow in a software within the last one to three years and we're still ramping those penetration effort. So it varies across the portfolio and our management to that is really.

Speaker Change: System of action software solution specific.

Speaker Change: Okay.

Speaker Change: Perfect. Thank you very much for anthrax.

Speaker Change: Thank you.

Speaker Change: Our last question comes from Erin Kimpton of citizens JMP. Your line is now open.

Erin Kimpton: Alright, thanks, so much guys those parts.

Operator: All right. Thanks so much, guys. I was talking to myself on mute earlier.

Speaker Change: Talk about myself from here on.

Erin Kimpton: On mute earlier I apologize can you give us an update on the ever helps consolidation is that trending ahead of the rest of these optimization on branch consolidations, where we won't see as much until 2025 and beyond given that you kind of started with ever health.

Speaker Change: And what was the question. Thanks, Darrin was it was about ever pro or con.

Speaker Change: Yeah.

Matthew Feierstein: So I think we've talked over the last couple of quarters about both the brand rollout and website optimizations. If you take a look at our core solutions, they're all by EverHealth, and the subproducts are by EverHealth, We've invested over the past couple of months in bringing new leadership from a commercial go-to-market perspective, which has started to see the fruits of those investments from a conversion improvement perspective or an increase in ASP and actually a reduction in sales cycle time.

Speaker Change: So I think we've talked over the last couple of quarters about both the brand rollout and website optimization. If you take a look at our core solutions Theyre all by ever health the sub products by ever health we've.

Speaker Change: We've invested over the past couple of a couple of months and bringing new leadership from.

Speaker Change: From a commercial go to market perspective, which is star.

Speaker Change: <unk> started to we're starting to see the fruits of those investments from a conversion improvement perspective or increase in asps.

Speaker Change: I'm actually a reduction in sales cycle time.

Matthew Feierstein: And when you look at payment enablement attached to new customer acquisition, we increased that from the low 30s in Q1 to the mid-50s in Q2. So my answer would be we've seen good progress in terms of both the transformation and the optimization of how we are going to market and bringing those products into the market to deliver value to both new customers and the existing customers that continue to expand their share of wallet with us. And I would just add, I think you asked, you know, when we think about the broader transformation program, does that follow EverHealth? And absolutely no.

Speaker Change: And when you look at payment enablement attach on new customer acquisition, we increased that from the low <unk> in Q1 to the mid fifties.

Speaker Change: In Q2, so my answer would be we've seen good progress in terms of.

Speaker Change: Both the transformation.

Speaker Change: And the optimization of how we are going to market and bringing those products.

Speaker Change: In into the market to deliver value to both new customers and the existing customers that continue to expand their share of wallet with us.

Speaker Change: I would just add I think you asked is that.

Speaker Change: It is when we think about the broader transformation program does that follow ever health absolutely certain components of what we have done in an ever health over the last year plus.

Matthew Feierstein: Certain components of what we've done in EverHealth over the last year plus, you know, when you look at our other verticals, specifically EverPro, operational consolidation like we've done at EverHealth, that's a model that we will follow. Brand consolidation. Product consolidation will look different across our verticals, but certainly some form factors of what we've done in EverHealth will follow at EverPro. That's very helpful.

Speaker Change: When we look to our our other vertical specifically ever pro operational consolidation like we've done at ever health. That's a model that we will follow brand consolidation product consolidation will look different across our verticals, but certainly some form factors of what we've done in ever health will follow whatever pro.

Speaker Change: That's very helpful. Thank you and then maybe it all up I think bill May have may have touched on a bit but are you seeing any increase in charge offs or customers that are unable to pay on time and then if not how do you approach that it was it was a big theme on the zoom in bulk haul out of the year how ever commerce. Thanks.

Operator: Thank you. And then maybe as a follow-up, I think Bill may have touched on this a bit, but are you seeing any increase in charge-offs or customers that are unable to pay on time? And then just, if not, how do you approach that?

Speaker Change: Without it.

Speaker Change: So why don't I take a shot at that I think for the most part our customers.

Operator: It was a big theme on the zoom info call last night. I'd love to hear how Evercommerce thinks about it. So why don't I take a shot at that?

Marc Thompson: I think, for the most part, our customers pay by credit card on a monthly subscription basis, or obviously, we're paid through the payments function in different ways. So we don't see a ton of that. And we really haven't seen any change where we do have receivables. We haven't seen any change in the pattern of behavior amongst our small business customers. Got it. Thank you very much. Thank you. This now concludes the question and answer session. I would now like to turn it back to Eric Remer for his closing remarks. Thank you so much.

Speaker Change: Pay by credit card on a monthly subscription basis, or obviously, we're paid all the payments functional in different ways. So we don't see a parmesan and we'd really haven't seen any change where we do have receivables we haven't seen any change in pattern of behavior amongst our small business customers.

Speaker Change: Got it thank you very much.

Speaker Change: Thank you.

Eric <unk>: This now concludes the question answer session I would now like to turn it back to Eric <unk> for closing remarks.

Eric Matt: Thank you so much.

Eric Remer: You know, we were pleased with our results and look forward to continuing our transformation optimization throughout this year and through 25. And I just want to make a genuine thank you for all the work you've done over the past almost eight years as an organization grew up with Marc, and he's done an amazing job both providing value across the organization and also building a legacy within his organization. So we have the ability to promote from within and have a really great leader step up. So, thank you, Marc, for all your contributions. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Eric Matt: We're pleased with our results and look forward to continuing our transformation optimization throughout this year and $2 25, and just want to have a following remark as this will be the last.

Eric Matt: Mark joins our earnings calls that the judgment. Thank you for all the work he has done over the past almost eight years.

Mark: As an organization grew up with market is that our amazing job both.

Mark: Providing value across the organization and also building.

Speaker Change: Legacy within these organizations that we have the ability to promote from within and have a really great leader to step up. So thank you Mark for all your contribution.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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Operator: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Thank you for standing by and welcome to the Evercommerce's second quarter 2024 earnings call. My name is Brianna and I will be your operator for today. At this time, all participants are in a listen-only mode.

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Brianna: Thank you for standing by and welcome to the Evercore versus second quarter 2024 earnings call. My name is Brianna and I will be your operator for today.

Speaker Change: At this time all participants are in a listen only mode.

Bradley Korch: 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 one on your telephone; you will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. As a reminder, this conference call is being recorded today, Tuesday, August 6, 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.

Mark: After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Speaker Change: As a reminder, this conference call is being recorded today Tuesday August six 2024.

Speaker Change: And I would now like to turn the conference over to Brad <unk>.

Brad: VP and head of Investor Relations for Evercore. Please.

Speaker Change: Please go ahead.

Bradley 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, Evercommerce's incoming chief financial officer and current chief accounting officer, Ryan Syrek, and Evercommerce's Chief Operating Officer, Evan Berlin. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended June 30, 2024. For a link to the live or replay webcast, please visit the investor relations section of the Evercommerce website, www.evercommerce.com.

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

Speaker Change: Joining them for the Q&A portion of the call is ever Commerce as President Backfire Stein ever Commerce, as incoming Chief Financial Officer, and current Chief Accounting Officer, Ryan <unk> and.

Mark: And ever Commerce, as Chief operating Officer, Adam Berlin.

Mark: This call is being webcast with a slide presentation that reviews, the key financial and operating results for the three months ended June 32024.

Speaker Change: For a link to live or replay webcast. Please visit the Investor Relations section of the other commerce website www dot ever Commerce Dot com.

Speaker Change: Slide presentation and earnings release are also directly available on the site.

Bradley Korch: The slide presentation and earnings release are also directly available on the site. Please turn to page two of our earnings call presentation while I review our Safe Harbor statement. Statements made on this call and in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements, except as required by law.

Speaker Change: Please turn to page two of our earnings call presentation, while I review, our Safe Harbor statement.

Mark: Statements made on this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward looking statements.

Speaker Change: Such statements are based on the current expectations and beliefs of management.

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

Mark: We undertake no obligation to publicly update or revise these forward looking statements except as required by law.

Bradley Korch: We will also refer to certain non-GAAP financial measures to provide additional information to you, our investors; a reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call. Before we discuss second quarter results, I would like to once again highlight the presentation of results and KPIs included in the earnings call slides and our prepared comments. As discussed last quarter, we announced the sale of our four fitness industry solutions in early March. The sale of the two North American solutions closed simultaneously with the deal signing on March 13th, and the two international solutions closed on July 5th.

Mark: We'll also refer to certain non-GAAP financial measures to provide additional information to you our investors.

Mark: A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation.

Mark: Before we discuss second quarter results I would like to once again highlight the presentation of results and Kpis included in the earnings call slides and our prepared comments.

Mark: As discussed last quarter, we announced the sale of our four fitness industry solutions in early March the sale of the two North American solutions closed simultaneous with deal signing on March 13th and the two international solutions closed on July one.

Bradley Korch: Our GAAP results include the two North American solutions through the date of closing, although two international solutions are held for sale and will continue to be reported in the results of operations through the second quarter of 2024. As a result, revenue growth rates are affected by the sales of North American. Operational metrics such as customer count TPV and customers enabled for more than one solution that we will discuss today have all been adjusted to exclude the fitness solutions on a pro forma basis. I will now turn it over to our CEO, Eric Remer, please. Thank you, Brad.

Mark: Our GAAP results include the two North American solutions with data closing, although two international solutions are held for sale and continue to be reported in our results of operations through the second quarter of 2024.

Mark: As a result revenue growth rates are affected by the sale of the North American assets.

Mark: Operational metrics, such as customer count TBD and customers enable for more than one solution that we will discuss today have all been adjusted to exclude the fitness solutions on a pro forma basis.

Mark: I will now turn it over to our CEO Eric Reamer. Please continue.

Eric Remer: On today's call, I will highlight second quarter 2024 results and dive into some key customer trends. We'll discuss some case studies on our customer payment adoptions and provide an update on our transformation and optimization initiatives before turning the call over to Marc to dive deeper into our financials. Tune in to our second quarter highlights; our reported revenue exceeded the top end of our guidance range with growth of 4.3% year over year; for former revenue growth, which excludes the North American fitness assets sold in March was 6%; adjusted EBITDA of $41.2 million beat the midpoint of our guidance, representing the 23.2% margin; just even the margins expanded modestly year over year despite the investments made. Payments revenue, excluding fitness solutions, grew 8% year-over-year, driven by our 8.4% growth in TPV.

Eric Reamer: Thank you Brad on today's call I will highlight second quarter 2024 results.

Eric Reamer: Moving to some key customer trends.

Speaker Change: Got some case studies on our customer payment options and provide an update on our transformation and optimization initiatives before turning the call over to mark that deeper into our financials.

Mark: Turning to our second quarter highlights our reported revenue exceeded the top end of our guidance range with growth of four 3% year over year.

Mark: Former revenue growth, which excludes the north American fitness asset sold in March with 6%.

Mark: Adjusted EBITDA of $41 $2 million beat the midpoint of our guidance range, representing a 23, 2% margin.

Speaker Change: Adjusted EBITDA margins expanded modestly year over year, despite investments back into the business.

Eric Reamer: Payments revenue, excluding the fitness solutions grew 8% year over year, driven by our eight 4% growth in TPP.

Eric Remer: Driving payments adoptions continues to be a key element of our strategy, one that I will highlight with some case studies in a few moments. In the second quarter, our board also increased our share repurchase authorization by $50 million and extended the program to the end of 2025. In the second quarter, we repurchased approximately 2.5 million shares for $24.1 million, bringing our total repurchase since the inception of our buybacks in mid-2022 to 15.6 million shares. At the end of the second quarter, we had approximately $54 million remaining to authorize.

Eric Reamer: Driving payments adoption continues to be a key element of our strategy one that ill highlight with some case studies in a few moments.

Eric Reamer: In the second quarter, our board also increased our share repurchase authorization by $50 million and extended the program through the end of 2025.

Eric Reamer: In the second quarter, we repurchased approximately $2 5 million shares for $21 million, bringing our total repurchase since inception of our buybacks in mid 2022 to $15 6 million shares.

Eric Reamer: As the end of second quarter, we had approximately $54 million remaining authorization.

Eric Remer: Evercommerce provides SaaS solutions for the service FMV economy. We offer tremendous value to our customers by providing solutions tailored to the unique workflows and interactions the various services require. Our software solutions not only provide the system of action necessary to run the daily business process but also the marketing solutions to attract your business, Billionaire Payment Solutions to collect payments Effortlessly, and the customer experience solutions to create a predictable and convenient experience. Our solutions are cost-effective, easy to implement, and purpose-built for the service business.

Speaker Change: Ever Commerce provides SaaS solutions for the service F&B economy.

Speaker Change: We offer tremendous value to our customers by providing solutions tailored to unique workflows and interaction with the various services required.

Eric Reamer: Our software solutions not only provide the system of action necessary to run their daily business processes, but also the Martin additions to attractive business.

Eric Reamer: Payment solutions to collect effortlessly and.

Eric Reamer: And the customer experience solutions to create predictable and convenient experiences.

Eric Reamer: Our solutions are cost effective easy to implement and purpose built for the service businesses.

Eric Remer: We provide end-to-end solutions that our more than 690,000 customers need to compete and grow in a marketplace that is rapidly transforming. Excluding the North American fitness solutions we've sold and including our kick serve acquisition, we ended the quarter with $682 million in LTM revenue, representing 7% growth. With a focus on balanced profitability, we generated 24.1% adjusted unit dimensions on an LTM basis.

Eric Reamer: We provide end to end solutions that are more than 690000 customers need to compete and grow in a marketplace that is rapidly transforming.

Speaker Change: Excluding the North American furniture solutions, we sold and including our <unk> acquisition, we ended the quarter with $682 million in LTM revenue, representing 7% growth.

Eric Reamer: With a focus on balanced profitability, we generated 24, 1% adjusted EBITDA margin on an LTM basis.

Eric Remer: Finally, we crossed over the $12 billion mark of annualized total payment volume, or TPV, a key metric for not just payment adoption but for growth and profitability. We report our progress and payments adoption quarterly as the key measure of our land and expanse strategy. We land with a core business management software that upsells and cross-sells additional features, services, and products, leading with payments, our most mature cross on those.

Speaker Change: Finally, we crossed over the $12 billion, Mark with annualized total payment volume or TBD, a key metric for not just payments adoption.

Eric Reamer: Both in profitability.

Eric Reamer: We report our progress on payments adoption quarterly as a key measure of our land and expand strategy.

Eric Reamer: And with that core business management software and then upsell cross sell our existing customer additional features services and products, leading with payments are most mature across our motion.

Eric Remer: This enhances the value that our customers receive from the relationship with Evercommerce and drives additional revenue. At the end of the second quarter, 199,000 customers were able to use more than one solution, expected to see 25% year-over-year growth.

Eric Reamer: This enhances the value that our customers you see the relationship with ever Commerce and drive additional revenue.

Eric Reamer: At the end of the second quarter of 199000 customers were able to more than one solution.

Eric Reamer: Reflecting a 25% year over year growth.

Eric Reamer: As we discussed when we introduced this metric enabling customers to more than one solution is the first step in the funnel that leads to increased revenue retention and ultimately profitability of these customers.

Eric Reamer: Once customers are enabled the next action for US is to help facilitate usage in the case of payments. This is helping our customers to actively process payments on our platform.

Eric Reamer: We measure this step in the funnel with utilization at the end of the second quarter, approximately 87000 customers actively utilizing more than one solution, reflecting a 60% year over year growth.

Eric Reamer: Customers the purchase and utilize more than one solution are naturally some of our most profitable customers.

Eric Remer: Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers. This is because we are providing significant value to them in their business. A positive byproduct of our cross-funding motion is strong net revenue. Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, for core software payment solutions was 97%.

Eric Reamer: This is because we provided significant value to them in their businesses.

A positive byproduct of our cross sell motion is strong net revenue retention.

Eric Reamer: Looking back over the trailing 12 months, our annualized net revenue retention, our IRR for our core software and payment solutions It was 97%.

Eric Remer: While this is down slightly on a sequential basis, a major driver here was the anniversary of a price increase in one of our high-velocity, lower ARPU solutions and not a measurable change in our customer trend. Invented payments is a highly accretive cross-sell opportunity and is a key component of Evercommerce's growth strategy, year over year of payments revenue excluding the fitness solutions created counting for profit with 17% of We report our payments revenue on that basis.

Eric Reamer: While this is down slightly on a sequential basis, a major driver here was the anniversary of price increase in one of our high velocity lower RPC solution and not a measurable change in a customer churn dynamics.

Eric Reamer: Embedded payments is the most accretive cross sell opportunity and is a key component of ever commerce with growth strategy.

Eric Reamer: Year over year, our payments revenue, excluding the fitness solutions grew 8%.

Eric Reamer: Accounting for approximately 17% of overall revenue.

Eric Remer: And as a result, payment revenue contributes approximately 95% of gross margin; that's a meaningful contributor to overall adjusted EBITDA margin. Second quarter estimated annual total payments volume, or TPV, was approximately $12.1 billion, representing 8.4% year over year growth.

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

Eric Reamer: Second quarter estimated annual total payment volume of TPB was approximately $12 $1 billion.

Eric Reamer: <unk> represented eight 4% year over year growth.

Eric Reamer: Key to invest and actively manage our onboarding program to accelerate payment adoption, which we believe can accelerate payments revenue growth.

Eric Reamer: These payment and cross sell enabled metrics emphasize the good progress we are making but we are still very much in the early innings of this story.

Eric Remer: To illustrate the impact, continued progress can happen, we want to walk through two case studies, one on payments adoption, and a second regarding the growth opportunity for the newly launched EverPro Edge subscription. Starting with the payments adoption of Timely, which is our salon and spa software that's focused on the New Zealand, Australian, and UK markets, kindly the full service system of action software to allow salon owners to manage customer requirements, inventory, stylist scheduling, and, of course, take payment. When we acquired this solution in late 2021, Hynes' initial use of case payments was for taking appointment deposits via the web.

Eric Reamer: To illustrate the impact continued progress can have on our business, we want to walk through two case studies.

Eric Reamer: On payments adoption and a second regarding the growth opportunity by newly launched epic pro edge subscription adoption.

Eric Remer: While this provided a much-needed service for our customers, in these markets, appointment deposits are as common as restaurant reservation deposits have become in the US, and did not allow our customers to make payments for all their. What our customers really needed was a point-of-sale solution that could be used within the swan to capture payments for swan services, like care cuts, and products sold in the store as well as invest in it to make that happen.

Starting with the payments adoption tightly which is our salon and spa software that's focused on the deal in Australia and UK market.

Eric Reamer: Currently the full service pits or batch in software that allows us to on a risk managed customer appointments inventory Silas scheduling and of course, taking payments.

Eric Reamer: When we acquired this solution in late 2021 times initial use case was for taking appointment deposits via the web.

Eric Reamer: This provided much needed service for our customers in these market deployment deposits are as common as restaurant reservation deposits have become in the U S did.

It did not allow for our customers to make payments for all of their services.

Eric Reamer: What our customers really needed was a point of sale solution that can be used within this line to capture payments for Salon services care Cots products sold in the store as well.

Eric Reamer: So we invested to make that happen.

Eric Reamer: We develop features within our software to handle these payments, we partnered with a new provider to offer point of sale terminals in Salon.

Given the nature of our SMB focused business these terminals needed to be self provisioning and easy to use out of the box.

Eric Reamer: After completing this new integration and ironing out the Kinks in the point of sale device enablement, we've seen our TPP approximately double in just over a year.

This is driven by both average annualized PPV per active processing customer growth of over 50% and growth in customers enabled prepayments processing from 41% to 52% of customers over the same time period.

Eric Reamer: Our second case study at Evercore edge in the second half of 2023.

Eric Remer: In the second half of 2023, we introduced our new Everpro Edge solution for existing joysticks. As we discussed at our March earnings call, EverPro Edge is a new solution that provides customers the opportunity to save, learn, and grow, creating a community and trusted brand for our engagement. Everpro Edge provides the opportunity for our customers to engage with educational content to help them improve their operations, as well as earn cash back rebates at leading vendors where they may already be purchasing.

Speaker Change: He is our new evercore edge solution for existing joint customers.

Speaker Change: As we discussed on our March earnings call ever per edge is a new solution that provides customers the opportunity to save learn and grow.

Speaker Change: The community and trusted brand for unusual with them.

Speaker Change: <unk> edge provides the opportunity for our customers to engage with educational content to help them improve their operations as well as our cashback rebate, leading vendors, where they may already be purchasing goods.

Eric Remer: Since the introduction of Edge, we have seen Joy's customers at Joint Edge grow their overall ARPU by approximately three times. Given that the rebate portion of the Edge is nearly 100% margin, this ARPU growth also translates to significant margin expansion. Edge also hints at the value of these customers gained from the Evercommerce relationship, and the rebates received can, in some cases, offset the cost of the software broker.

Speaker Change: Since the introduction of edge enjoys customers that joined edge grow the overall <unk> by approximately three times.

Speaker Change: Given that the rebate portion of the edge at nearly 100% margin. This ARPA growth also translate into significant margin expansion.

Speaker Change: Edge also enhances the value of these customer gain from the ever commerce relationship and the rebates, we see some gains offset the cost of the software for our customers.

Eric Remer: This is a true win-win and something we think can help us better grow and retain. A key component of our growth acceleration strategy is our transformation optimization program, which is about what you would like to provide at QuickUp. During the quarter, we made significant progress against a multi-quarter program. On the optimization side, we continue to validate savings opportunities, looking to consolidate spend across vendors, and, in some cases, reimagine how we allocate resources. Our transformation initiatives continue to align our business around EverHealth and EverPro, putting the customer first, ultimately giving these business units the organizational structure and support they need to accelerate growth.

Speaker Change: This is a true win win and something we think can help us better grow and retain customers.

Speaker Change: A key component of our growth acceleration strategy is our transformation optimization program.

Speaker Change: But what you would like to provide a quick update.

Speaker Change: During the quarter, we made significant progress against our multi quarter program.

Speaker Change: On the optimization side, we continue to validate saving opportunities looking to consolidate spend across vendors and in some cases re imagine how we allocate resources.

Speaker Change: Our transformation initiatives continue to align our business around every health never pro customer vertical.

Speaker Change: Ultimately given these business unit organizational structure and support they need to accelerate growth.

Eric Remer: This includes simplifying our organizational structure and decommissioning legacy brands, as well as investing in key sales and go-to-market gaps that impact their growth. During the quarter, we made some key sales and market initiative hires that are integral steps to achieving the vision. We also launched our first ever pro website that begins to consolidate those product grants in the same fashion we discussed with EverHealth in the past.

Speaker Change: This includes simplifying our organizational structure and decommissioning legacy brands as well as investing a T cell and go to market gaps and it impacted our growth rate.

Speaker Change: During the quarter, we made some key sales and market leadership hires.

Integral steps to achieving the vision.

Speaker Change: We also launched our first ever <unk> website that begin to consolidate those product brands in the same fashion, we discussed with ever held in the balance.

Eric Remer: We've also begun to invest in common, company-wide systems that will increase operational efficiencies, aligned with our transformation efforts. We are doing the work now that we believe will enable us to accelerate growth to both enhance customer acquisition and improve cross-sell capability and, ultimately, also drive better profitability. In the coming months, we expect to have additional new and exciting announcements as we continue to drive our transformation journey. Before I turn the call over to Marc, I'd like to quickly comment on the announcement we made today in conjunction with the earnings release. This afternoon, we announce the appointment of Ryan Surek as Evercommerce's new chief financial officer.

Speaker Change: We've also begun to invest in common companywide system, the liquids operational efficiencies online with our transformation efforts.

Speaker Change: We are doing the work now that we believe will enable us to accelerate growth to both enhanced customer acquisition and improved cross sell capabilities and ultimately also drive better profitability.

In the coming months, we expect to have additional new exciting announcements as we continue to drive our transformation journey.

Speaker Change: Before I turn the call over to Mark I'd like to quickly comment on the announcement, we made today in conjunction with the earnings release.

Speaker Change: This afternoon, we announced the appointment of Brian Zurich, as Abercrombie <unk>, New Chief Financial Officer effective September six.

Eric Remer: September 6, Ryan joined Evercommerce a little over a year ago as its chief accounting officer, and working closely with him over the last year, it has become clear that he has both the skills and the drive necessary to help us lead Evercommerce's next phase of growth. This is a bittersweet announcement, though, as I'm excited to see Ryan step into this role.

Speaker Change: Brian joined ever Commerce little over a year ago, as our Chief accounting officer, and working closely with him over the last year has become clear that he had both the skill and the drive necessary to help us lead ever commerce that next phase of growth.

Eric Remer: I'll miss working with Marc, who's been a strong partner to me and the Evercommerce leadership team over the past eight years. Now I'll pass it over to Marc, who will discuss our financial results in more detail, as well as discuss third quarter and full year 2024 guidance. Thanks, Eric. Total reported revenue in the second quarter was $177.4 million, up 4.3% from the prior year period and exceeding the top end of our guidance range.

Speaker Change: This is a bittersweet announcement, though and I'm excited to see Ryan step into this role.

Speaker Change: This work with Merck with a strong partner to me.

Speaker Change: <unk> leadership team over the past eight years.

Mark Thompson: Now I will pass it over to Mark who will review our financial results in more detail as well as discuss third quarter and full year 2020 for guidance.

Mark Thompson: Thanks, Eric.

Eric Remer: This was also the highest quarterly revenue on record. Within total reported revenue, subscription and transaction revenue was $137 million, up 5.2% from the prior year period. And revenue for marketing technology solutions was $35 million, up 1.6% from the prior year period.

Mark Thompson: Total reported revenue in the second quarter was 177 4 million up four 3% from the prior year period and exceeding the top end of our guidance range.

Mark Thompson: This was also the highest quarterly revenue on record.

Mark Thompson: Within total reported revenue subscription and transaction revenue was $137 million up five 2% from the prior year period and revenue from marketing technology solutions was $35 million up one 6% from the prior year period.

Marc Thompson: We manage the business for sustainable organic growth and selectively utilize strategic acquisitions to augment the trajectory of this growth. As a result, we believe it's important for investors to evaluate our business growth on a pro forma basis, which is how we measure and manage the business internally. We calculate our pro forma revenue growth as though all acquisitions and divestitures closed as of the end of the latest period were closed as of the first day of the prior year period, including before the time we complete the acquisition or divestiture. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business.

We manage the business for sustainable organic growth and selectively utilize strategic acquisitions to augment the trajectory of this growth as a result, we believe it's important for investors to evaluate our business growth on a pro forma basis, which is how we measure and manage the business internally.

Mark Thompson: We calculate our pro forma revenue growth as though all acquisitions and divestitures closed as of the end of the latest period. We are closed as of the first day of the prior year period, including before the time, we completed the acquisition or divestiture.

Mark Thompson: We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business.

Mark Thompson: The second quarter of 2024 year over year pro forma revenue growth was 6% while year over year pro forma subscription and transaction revenue growth was seven 3%.

Mark Thompson: 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 up sell opportunities leading with payments.

Mark Thompson: While we believe that our marketing technology solutions are stabilizing amidst continuing headwinds there results negatively impacted consolidated revenue growth in the second quarter.

Mark Thompson: As Eric noted, we also exceeded the midpoint of our adjusted EBITDA guidance range second quarter. Adjusted EBITDA was $41 2 million, representing a 23, 2% margin versus 22, 8% in the second quarter of 2023, and six 2% growth in adjusted EBITDA year over year.

Marc Thompson: Adjusted gross profit in the quarter was $116.1 million, representing an adjusted gross margin of 65.4% versus 65.8% in Q2 2023. The slight decrease in gross margin on a year over year basis was largely due to the timing of revenue and cost of goods sold within the marketing technology solutions business and not an indication of change within the core SAS business.

Speaker Change: Adjusted gross profit in the quarter was $116 1 million, representing an adjusted gross margin of 65, 4% versus 65, 8% in Q2 2023.

Speaker Change: Slight decrease in gross margin on a year over year basis was largely due to the timing of revenue and cost of goods sold within the marketing technology solutions and not an indication of change within the core SaaS business.

Marc Thompson: Now I'll turn to adjusted operating expenses, which are reconciled in the appendix to this presentation. Overall, adjusted operating expenses declined from 43% to 42% in the quarter, underscoring our focus on profitability as we scale and grow the business. Adjusted sales and marketing expense was $28.8 million, or 16.2% of revenue, down from 16.9% of revenue reported in the prior year period.

Speaker Change: Now I will turn to adjusted operating expenses, which are reconciled in the appendix to this presentation.

Speaker Change: Overall, adjusted operating expenses declined from 43% to 42% in the quarter underscoring our focus on profitability as we scale and grow the business.

Speaker Change: Adjusted sales and marketing expense was $28 8 million or 16, 2% of revenue down from 16, 9% of revenue reported in the prior year period.

Marc Thompson: Adjusted product development expense was $19.6 million, or 11% of revenue, up from the 10.4% reported in the prior year period, largely due to planned investments and maintenance in our product. Adjusted G&A expenses were $26.5 million, or 14.9% of revenue, down from 15.7% of revenue in the prior year period. Adjusted G&A expenses declined both as a percent of revenue and in absolute dollars as we continue to optimize our operation. We continue to generate significant free cash flow as we invest to grow our business. Cash flow from operations for the quarter was $23.9 million as compared to $28.4 million in the prior year comparative quarter.

Speaker Change: Adjusted product development expense was $19 6 million or 11% of revenue up from the 10, 4% reported in the prior year period.

Speaker Change: Largely due to planned investments in maintenance and our products adjust.

Adjusted G&A expense was $26 5 million or 14, 9% of revenue down from 15, 7% of revenue in the prior year period.

Speaker Change: Adjusted G&A expenses declined both as a percent of revenue and in absolute dollars as we continue to optimize our operations.

Speaker Change: Levered free cash flow was $19 million in the quarter down approximately $3 6 million or 16% year over year and was negatively impacted by the timing of working capital changes.

Speaker Change: Adjusted Unlevered free cash flow was $30 million in the quarter and $121 million for the last 12 months, representing a 11% and 22, 7% year over year growth respectively.

Marc Thompson: Strong free cash flow generation is a deliberate goal for the evercommerce team as it enables the flexibility to invest in our growing business while also enabling us to efficiently allocate capital across a spectrum of opportunities, including the outstanding buyback authorization and M&A prospects. In the second quarter, we repurchased approximately 2.5 million shares for a total cash consideration of approximately $24.1 million at an average price of $9.57 per share.

Speaker Change: Strong free cash flow generation is a deliberate goal for the ever commerce seeing because it enables the flexibility to invest in our growing business, while also enabling us to efficiently allocate capital across the spectrum of opportunities, including the outstanding buyback authorization of M&A prospects in the second quarter, we repurchased approximately $2.

Speaker Change: <unk> 5 million shares for a total cash consideration of approximately $24 1 billion at an average price of $9 57 per share.

Marc Thompson: Due to the board's increased authorization, which Eric mentioned, as of June 30, 2024, we had approximately $54 million remaining in our repurchase authorization that runs through year-end 2025. We ended the quarter with $87 million in cash and cash equivalents, and we maintain $190 million of undrawn capacity on our revolvers. Our debt is a combination of floating and fixed rates, and total net leverage, as calculated per our credit facility at the end of the quarter, was approximately 2.6 times, consistent with our financial policy.

Speaker Change: We ended the quarter with $87 million in cash and cash equivalents and we maintain a $190 million of undrawn capacity on our revolver.

Speaker Change: 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, we have no material maturities until 2028.

Marc Thompson: We have no material maturities until 2028. I'd now like to finish by discussing our outlook for the third quarter of 2024. For the third quarter of 2024, we expect total revenue of $172 to $176 million, and we expect adjusted EBITDA of $39 to $42 million. We're leaving our full-year 2024 guidance unchanged.

Speaker Change: I would now like to finish by discussing our outlook for the third quarter of 2024.

Speaker Change: For the third quarter of 2024, we expect total revenue of $172 million to $176 million and we expect adjusted EBITDA of 39% to $42 million.

Speaker Change: We're leaving our full year 2024 guidance unchanged, we continue to expect revenue of $676 million to $696 million and adjusted EBITDA of 167% to $176 million.

Marc Thompson: We continue to expect revenue of $676 million to $696 million and adjusted events of $167 million to $176 million. Our guidance assumes flat year-over-year revenue trends within our marketing technology services business. Furthermore, we note that, as we said at the beginning of the year, 2024 will be a transition year in which we are making investments to support the transformation and continuing optimization of the business with an eye toward accelerating growth and increasing profitability.

Speaker Change: Our guidance assumes flat year over year revenue trends within our marketing technology services business.

With an eye towards accelerating growth and increasing profitability.

Speaker Change: And we will continue to prioritize long term value creation and seize opportunities to make accretive investments as they become actionable.

Marc Thompson: Well, we've accomplished a lot during this time, and I'm confident that the best is yet to come. Operator, we're now ready to take the first question. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: While we've accomplished a lot during this time I am confident that the best is yet to come.

Speaker Change: Operator, we're now ready to take the first question.

Speaker Change: Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Operator: Our first question comes from Bhavin Shah of Deutsche Bank. Your line is now open. So, Bhavin, I'm not sure that that came through as crisply. Could you repeat the second half? I think you were asking about macro climates and impact on revenue. And then I just didn't catch the second portion.

Speaker Change: Our first question comes from Mojave Czar of Deutsche Bank. Your line is now open.

Mojave Czar: Great. Thanks for taking my questions and market has been great working with you.

Speaker Change: First of all just it looks like marketing technology solution has kind of returned to year over year growth. After a couple of quarters declines how much of that was kind of execution versus macro related and can you just broadly give us an update where you are seeing from a macro perspective and kind of what's embedded in the guidance.

Operator: Yeah, the first one, sorry, just did marketing technology solutions kind of return to year over year growth after a couple of quarters of year over year decline? How much of that was execution versus macro and then just overall macro, what did you see in 2Q and kind of what's embedded for the rest of the year?

Speaker Change: The decline how much of that was execution versus macro and then just overall macro what are you seeing <unk> and kind of what's embedded for the rest of the year.

Got it alright, thank you so much.

Speaker Change: <unk> technology, the 1% one 6% growth this quarter versus I think slightly down quarter over quarter in Q1.

Speaker Change: I think look on the margin, it's a little bit of both I think we continue to execute well, but the headwinds remain.

Marc Thompson: I think we continue to execute well, but the headwinds remain. So, I don't really think much has changed. We continue to think we are stabilized. If you add up the two quarters, the first six months of the year, we're slightly down year over year, which is consistent with our guidance flat for the full year. In terms of macro trends for the full year, do you want to comment on that? Yeah. Thanks, Bob. And we're not seeing it. We check, you know; we're kind of constantly watching this.

Speaker Change: In terms of macro trends for the full year do you want to comment on that thanks, Bob and we're not seeing we check.

Eric Remer: So, we really started at the top of the lead funnel all the way down to, you know, retention statistics, and, you know, to date, everything has been, you know, fairly stable in terms of, you know, seeing any macro trends. So, nothing has changed in the business from a kind of macro perspective, and that's reflected in the guidance for the rest of the year, which is helpful. Just one quick follow up. It looks like payments revenue grew more in line with PPV growth this quarter, while previously it's been growing in excess of PPV growth. Any reason why they're converging today and kind of how do we think about the relationship between both going forward? Yeah, thanks, Bhavin. It's Evan.

Speaker Change: Positive launch and so it really started at the top of the lead funnel all the way down to retention statistics and to date everything that has been fairly stable in terms of seeing any macro trend. So nothing has changed in the business from a kind of macro perspective, and that's reflected in the guidance the rest of the year.

Speaker Change: Sure.

Speaker Change: It's very helpful. Just one quick follow up it looks like kind of payments revenue grew more in line with TPG growth. This quarter, while previously kind of it's been growing in excess of keeping your growth any reason why they are converging today and kind of how do we think about the relationship of both going forward.

Evan Berlin: Yeah, I would just say, you know, we talked about this last quarter in terms of, you know, taking rate expansion and the control that we have over that from both a pricing perspective for our customers and then our relationships with our processors, which we always work to optimize our costs. We continue to expect that there will be opportunities to expand TPV growth, and ultimately, take rate will kind of take care of itself as we have different program mix and utilization from our customers over a period of time. So we expect to have continued TPV growth and take rate expansion and optimization over the long term. Thanks so much for taking my questions.

Devin: Yes, Thanks, Bob Devin I would just say we've talked about this I think last quarter in terms of.

Speaker Change: Take rate expansion in the control that we have over that from both.

Speaker Change: Pricing perspective to our customers and our relationships with with our processors, which we always work to optimize our costs.

Speaker Change: We continue to expect that there will be opportunities to expand TBD growth and ultimately take rate will kind of take care of itself.

As we have different program mix and utilization from our customers over a period of time. So we expect to have continued TBD growth and take rate expansion and optimization.

Speaker Change: Over over the long term.

Speaker Change: Thanks, so much for taking my questions.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from Matthew Hedberg of RBC Capital Markets. Your line is now open. Hey guys, this is Mike Richards on for Matt.

Speaker Change: Our next question comes from Matthew Hedberg of RBC capital markets. Your line is now open.

Speaker Change: Hey, guys. This is Mike Richards on for Matt. Thanks for taking the question.

Speaker Change: Yes, maybe on the optimization initiatives how has that trended.

Speaker Change: Relative to your expectations now that we're a couple of quarters and then now maybe with the CFO transition does does anything change here in terms of timeline are aware.

Speaker Change: We're allocating resources and investments.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Start on the on the CFO side I'll, let Matt talk about kind of where we are in the optimization and the answer is no nothing changes in terms of our expectations of a continuation of the optimization as well as the transformation. Unfortunately, Mark has built a really strong organization from top to bottom and we're very fortunate to have.

Matthew Feierstein: Fortunately, you know, Mark has built a really strong organization from top to bottom. And we're very fortunate to have Ryan Surick, who's been serving as CEO for the last year, has that previous experience, and we believe we'll make a very smooth transition and really follow through with all the work that both Mark and the rest of the team have done to kind of put that optimization and transformation, you know, in motion.

Speaker Change: Sarah Coos and serving as a sale for the last year has that previous experience and we believe will make a very smooth transition and really followed through with all the work that both mark and the rest of the team has done to kind of put that optimization and transformation.

Matthew Feierstein: So in terms of where we are on it, Matt, you want to talk about that? Yeah, I think we focused last year, sorry, last quarter, really highlighting the focus on the ever-else and the ever-pro verticals and really giving leaders in these verticals the organizational structure and the support they need to accelerate growth. So things like simplifying our organizational structure, decommissioning legacy brands, investing in key sales and go-to-market gaps, things that have impacted growth rates, obviously, that's where we are focused from a transformation perspective.

Speaker Change: In motion so in terms of where we are on it Matt you want to talk about that yeah. I think we focused last year, sorry last quarter really highlighting the focus on the ever health never pro verticals and really giving leaders in.

Matt: In these verticals the organizational structure and the support they need to accelerate growth so things like simplifying our organizational structure decommissioning legacy brands investing in key sales and go to market gaps things that have impacted growth rate. Obviously, that's where we're focused from a transformation perspective during the quarter. We continue to work with our third party change Spanish.

Matt: Rep to define our next steps we've made some key hires within those verticals as well. So excited I think we are where we thought we would be from a transformation perspective and from an optimization perspective, I think you heard our remarks during the opening of the call. We are also where we expect it to be with real impact that we'll see pull through in <unk>.

Marc Thompson: Yeah, just to double-click on that, I mean, Eric mentioned a couple of transformation-related expenses that hit this quarter, and that's a little front-end loaded, if you will. We'll start to see the thread through the efficiencies, we believe, in the back portion of the year and then carry them into 2025. But as I said in my remarks, you know, we haven't seen a lot of that yet.

Speaker Change: One five yes, just to double click on that Eric mentioned in a couple of transformation related expenses that hit this quarter and that's a little front end loaded if you will we'll start to see the thread through the efficiencies. We believe in the back back portion of the year.

Operator: And really, this is all positioning to exit the year into 2025. Thanks, Seth. Thank you. Thank you. Our next question comes from Ryan MacWilliams of Barclays. Your line is now open.

And then Terry.

Terry: Into 2025, but as I said in my remarks, we haven't seen a lot of that yet and really this is all positioning to exit the year into 2025.

Terry: Thanks, guys.

Terry: Thank you. Thank you.

Speaker Change: Thank you our next question.

Comes from Ryan Macwilliams of Barclays. Your line is now open.

Ryan Macwilliams: Hey, guys. Thanks for take the question and congrats Mark on a great Ron.

Marc Thompson: And then how should we think about what level NRR should stay at for the rest of the year? Yeah, you know, from a puts and takes standpoint. I think you heard us mention this. I think when we looked at when you look at the retention dynamics of the business as a whole, we really saw a lot of consistency. From that NRR perspective, obviously, we mentioned it last quarter, it continues to have impact from the anniversary of some larger pricing increases in one of our high velocity, but lower RPU solutions, where we just won't see that quantum of pricing increase layer on top this year. So we are seeing the impact of that anniversary and will likely see it for another quarter or so.

Speaker Change: And then how should we think about what level <unk>.

Speaker Change: For the rest of this year.

Speaker Change: Yes.

Speaker Change: From a puts and takes standpoint, I think you heard us mentioned this when.

Rich: When we looked at rich when you look at the retention dynamics of the business in whole, we really saw a lot of consistency.

Rich: That enter our perspective, obviously, we mentioned it last quarter. It continues to have impact from the anniversary of some larger pricing increases in one of our high velocity, but lower RPT solutions, where we just won't see that quantum of pricing increase layer on top.

Marc Thompson: But again, with the stable retention dynamics and our focus on cross-sell and upsell, our expectation is that NRR should stay in this neighborhood where it has been. And obviously, we've talked about the opportunity for that to continue to grow as our motions from a cross-sell perspective, around payments around the edge or further integrated into the base of software customers. We obviously have the opportunity to continue to take that up and north to the places that it has been and beyond.

Rich: In this year. So we are seeing the impact of that anniversary and will likely for another quarter or so but again with the stable retention dynamics with our focus on cross selling upsell.

Rich: Our expectation is that MLR should stay in the neighborhood that it has been and obviously, we've talked about the opportunity for that to continue to grow as our motions from a cross sell perspective.

Rich: <unk> payments around edge are further integrated into the base of software customers. We obviously have opportunity to continue to take that up and north to the places that it has been in and beyond.

Rich: Thanks, and then for Mark just wanted to ask all your revenue guide.

Mark Thompson: Should we think about it.

Speaker Change #101: For the second quarter revenue came in above the range for the full year, you're taking up the revenue contribution from international operations as a part of the guide or is there other things we should think about inflation for the full year guide. Thanks.

Marc Thompson: I mean, the revenue guidance Brad, the revenue guidance we've given all year doesn't include fitness, full stop. So I think if you look at the press release, we delineated exactly what the fitness contribution was in the quarter. And so that's how you should compare those. And then, yes, for the third quarter and the fourth quarter, it does not include any.

Mark Thompson: Thanks.

Brad: Yes, Ryan I mean, the revenue guidance. This is Brad the revenue guidance. We've given all year doesn't include fitness full stop so I think if you look at the press release, we delineated exactly what the contribution was in the quarter and so thats. How you should compare those I mean, yes for the third quarter and the fourth quarter. It does not include any sense.

Brad: Okay.

Brad: Yeah.

Operator: Operator, are you ready for the next question? Yes, thank you. Our next question comes from Alexander Sklar of Raymond James. Your line is now open. Hi, thanks for taking the question. This is Jon on behalf of Alex.

Speaker Change #102: Operator next question.

Speaker Change #103: Yes. Thank you.

Speaker Change #104: Our next question comes from Alan Alexander Sklar of Raymond James Your line is now open.

John: Hi, Thanks for taking the question. This is John on for Alex I wanted to start with the cross sell specifically on the multi solution customers can you talk about some of the puts and takes driving the growth. There is still up nicely year on year, but it looks like the net adds sequentially was below recent quarters. So anything you flagged there may be seasonality or changes in go to market or maybe the cycle was.

Alexander Sklar: I wanted to start with Crossell, specifically the multi-solution customers. Can you talk about some of the puts and takes driving the growth there? It's still up nicely year on year, but it looks like the net ad sequentially was below recent quarters. So anything you can flag there, maybe seasonality or changes in the market or maybe the sales fitness there, just any color you can provide there. No, you know, I appreciate the question. Thanks. Thanks for that. It certainly wouldn't call that necessarily seasonality.

Speaker Change #105: Just any color you can provide there.

Eric Remer: Obviously, a key focus on payments, we know we have a lot of runway from a cross-sell perspective on payments. So, you know, big focus there. You've heard us talk about EverPro Edge.

Speaker Change #105: No.

Speaker Change #106: I appreciate the question. Thanks, Thanks for that and certainly I wouldn't call that necessarily seasonality, obviously, a key focus on payments. We know we have a lot of runway from a cross sell payments cross sell perspective from payments.

Speaker Change #107: So big focus there you've heard us talk about ever pro edge.

Speaker Change #107: It is again another value add solution that can be cross sold into our system of action software basis, we have our customer experience solutions, where again opportunity exists and we are executing on programs to cross sell there those there so.

Eric Remer: That is, again, another value-added solution that can be cross-sold into our system of action software bases. We have our customer experience solutions where, again, opportunity exists, and we are executing on programs to cross-sell those there. So, you know, some of those products are somewhat still early in their lifecycles, like Edge.

Speaker Change #107: Some of those products are somewhat still early in their lifecycle like edge.

Speaker Change #107: And so the consistency of those.

Quarter over quarter may not be the right measurement period from that perspective I E. For example.

Speaker Change #107: In edge there are two solutions that we've lost it launched this integration with it may take us several more quarters before the next two integrations or launch, but those are in planning and those will be executed so.

Eric Remer: And so the consistency of those, you know, quarter over quarter may not be the right measurement period from that perspective, i.e., for example, you know, we are in Edge, there are two solutions that we've launched this integration with. It may take us several more quarters before the next two integrations are launched, but those are in planning, and those will be executed. So, you know, as we bring more integrated products to market, quarter over quarter growth may not be the best way to look at it year over year, but certainly would be the best way to look at it. Okay, that's a helpful color there.

Speaker Change #107: As we bring more integrated products to market.

Speaker Change #107: Quarter over quarter.

Speaker Change #107: Growth may not be the best look year over year, certainly would be the best way to look at it.

Speaker Change #108: Okay. That's helpful color there and then on the TV CTV growth here I'm curious if you can maybe quantify I think last quarter you guys called out of the top five solution there were trending nearly <unk>.

Speaker Change #109: 30% of TPB I think was driven from those solutions and that was wondering 20% I'm. Just curious can you speak to how that doesn't trended there just the amount of growth generated by finding out those businesses.

Speaker Change #109: Yes.

Speaker Change #110: The percentage of aggregate PPV remains relatively stable at 28%. It was the same last quarter and our growth rate of those top five solutions from a TPU perspective, with 22% year over year and Thats really in line with with what we spoke to from from last quarter. Like we spoke then still holds true in this quarter, that's where the core focus.

Speaker Change #110: The core investment from our payments penetration standpoint is in those top type solutions.

Speaker Change #111: Thank you very much.

Speaker Change #111: Thank you.

Operator: Thank you. Our next question comes from Mason Marion. Mr. Jeffries, your line is now open.

Speaker Change #111: Our next question comes from Nathan Maryanne.

Speaker Change #112: Of Jefferies. Your line is now open.

Nathan Maryanne: Hi, Thanks for taking the questions first congrats to you Ryan on the promotion and best of luck to you Mark.

Speaker Change #113: So alright, if that's on the capital allocation front, though you divested several underperforming assets and have allocate more money to share repurchases you've spoken about your increased focus on streamlining our current operation.

Speaker Change #114: We've heard from others that private valuations are starting to rationalize a bit.

Speaker Change #168: Can you talk about why this is the right time to focus more internally and allocate capital back into yourselves versus maybe.

Speaker Change #115: Navy externally and pursue more deals.

Mason Marion: Yeah, thanks for the question. You know, look, we're always looking, or we're constantly, you know, where you have our pulse on the market. And although there'll be rationalizing, there's still rationalizing from much higher points than we are currently trading.

Speaker Change #116: Yes, thanks for the question.

Speaker Change #117: We're always looking we're constantly.

Speaker Change #117: We have our pulse on the market and although there'll be rationalizing Mr. Rationalizing from much higher points than we are.

Speaker Change #117: Currently trading so from an accretive standpoint, and a value standpoint that we think.

Eric Remer: So from a creative standpoint and a value standpoint of what we think the underlying value of Evercommerce is, we and myself, the managing director, still strongly believe it is a very good investment for shareholders to be investing in the buyback. So we'll continue to look at things even through our kind of transformation period. If something comes that makes sense economically, and we think creative, the organization will execute on that as well. Great, and then you highlighted the point of sale traction within timely. Is there an opportunity to bring this technology to other parts of your business or geos? Yeah, absolutely.

Speaker Change #118: Underlying value of agro conferences.

Speaker Change #118: Itself the messaging the board still strongly believe it is a very good investment for shareholders to invest in.

Speaker Change #118: And the buyback so we will continue to look at things even through our transformation period.

Speaker Change #118: If it comes it makes sense economically and we think accretive to the organization, we will execute on that as well.

Speaker Change #119: Great and then you highlighted the point of sale traction within timely is there an opportunity to bring this technology to other parts of your business or Ges.

Eric Remer: When we think about the other top solutions that Matt mentioned, we either have point of sale solutions in the market at some level, or we'll be deploying them over the course of the next handful of quarters. So we're in the early stages of those opportunities. But as you pointed out, the timely case studies, a great example, we expect to get nearly 50% of our TPB by the end of the year from point of sale transactions at timely, and there's opportunity to do similar types of efforts in those other top solutions and other parts of our business that have been point of sale enabled for some time.

Speaker Change #120: Yes, absolutely when.

Speaker Change #120: When we think about the other top solutions that Matt mentioned, we either have point of sale solutions.

Speaker Change #120: Market at some level or we will be deploying them over the course of the next.

Speaker Change #120: A handful of quarters. So we're in the early stages of those opportunities but.

Speaker Change #120: As you pointed out the timely case study is Great example, we expect to.

Speaker Change #120: You get nearly 50% of our TPB by the end of the year from from point of sale transactions.

Speaker Change #120: Timely and there's opportunity to do similar types of efforts in those other top solutions in other parts of our business that have been at point of sale enabled for for some time. So it's a core part of the strategy in terms of.

Speaker Change #120: Driving utilization and share of wallet expansion on a go forward basis.

Speaker Change #121: Great. Thank you.

Speaker Change #121: Okay.

Speaker Change #122: As a reminder, you can ask a question you will need to press star one on your telephone and wait for your name to be announced.

Speaker Change #123: Our next question.

Erinn Kinston: Comes from Erinn Kinston.

Speaker Change #124: Citizens JMP your line is now open.

Operator: Our next question comes from Aaron Kimson of Citizens JMP. Your line is now open. Hello?

Speaker Change #124: Hello.

Operator: All right, we will take our next caller. Bill McNamara of Evercore ISI, your line is now open. Hi, this is Don on behalf of Kirk.

Speaker Change #126: Alright, we will take our next caller.

Okay.

Speaker Change #126: Bill Mcmahon mirror of Evercore ISI. Your line is now open.

Bill McNamara: Thanks for taking my question. Are you guys seeing any increased price sensitivity from small business customers? And how do you see pricing as a long-term strategy? Yeah, sure, I'll start, and others may want to add, you know, I think we've expressed this in past quarters, we look at price from a price to value standpoint. So, we certainly want to, as we continue to enhance the value of the software that we're providing to our end customers, prices are absolutely a lever that we've used in the past, and we'll continue to use in the future, based on that price-to-value ratio.

Bill Mcmahon: Hi, This is bill on for Kirk and Thanks for taking my question are you guys seeing any increased price sensitivity from small business customers and how do you see pricing as a long term strategy for growth.

Bill McNamara: To the first part of your question, we've not seen any increased sensitivity from that pricing standpoint; we've got a long history with the multiple solutions that we have with pricing increases in the market. We certainly understand when we do that what the expectations of feedback and or turn might be. And, you know, we watch that data very closely; we've seen no changes, quarter over quarter, year over year, from a sensitivity standpoint with any actions we've taken. Great, thanks for taking my question.

Speaker Change #128: Yes, sure I'll start and others may want to add I think we've expressed this in past quarters, we look at price from a price value standpoint. So we certainly want to as we continue to enhance the value of the software that we're providing to our end customers prices is absolutely a lever that we've used in the past and will continue to use them.

Speaker Change #128: Future based on that that price to value ratio.

Speaker Change #129: So the first part of your question, we've not seen.

Speaker Change #129: Any increased sensitivity from that pricing standpoint, we've got a long history with multiples with the multiple solutions that we have with pricing increases in the market.

Speaker Change #129: We certainly understand when we do that what the expectations of feedback <unk> churn might be and we watch that data very closely we've seen.

Speaker Change #129: No no changes quarter over quarter year over year from a sensitivity standpoint with any actions we've done this year.

Speaker Change #130: Great. Thanks for taking my questions.

Speaker Change #130: Thank you.

Speaker Change #131: Our next question.

Speaker Change #131: Comes from Alexia <unk> of Jpmorgan. Your line is now open.

Operator: Thank you. Our next question comes from Alexei Gogolev of J.P. Morgan. Your line is now open.

Alexei Gogolev: Hello, everyone. We talked about some degradation of vendor management programs last quarter, mainly due to Wikimacro. Have you seen any improvements there? Sorry, Alexa, we didn't catch the degradation that you were referring to that we spoke about in the past quarter. Can you repeat?

Speaker Change #133: Hello, everyone.

Speaker Change #134: You talked about some degradation of vendor management program last quarter.

Speaker Change #135: Mainly due to weaker macro have you seen any improvement there.

Speaker Change #136: Alright ill actually we didn't catch the degradation that you were referring to that we had spoken to in the past quarter can you repeat.

Operator: Degradation of Vendor Management Programs. Are you referring to our EverPro Edge offering that we launched at the end of last year? We talked a little bit about it in our Q1 call where we continue to see nice traction with that solution. That's part of what we obviously highlighted in Eric's case studies. Okay, yeah, yeah. I was referring to some of the headlines that you've seen in some other articles, Matthew He

Speaker Change #137: Okay gradation of vendor management programs.

Speaker Change #138: Are you referring to our ever pro edge offering that we launched end of last year, we talked a little bit about it in our Q.

Speaker Change #138: One call, where we continue to see nice traction with that solution. That's part of what we obviously highlighted in Eric's case studies.

Speaker Change #139: Okay, perhaps.

Speaker Change #139: Yes.

Speaker Change #140: I was referring to.

Speaker Change #141: Some of the headwinds that you've seen in some other.

Speaker Change #141: Management programs.

Marc Thompson: But in terms of the dynamics that you are seeing in R&D and then sales and marketing, could you talk about how long we should expect to see? Elevate.

Speaker Change #141: But.

Speaker Change #141: In terms of.

Speaker Change #141: The dynamic that you're seeing on the R&D.

Speaker Change #141: And then sales and marketing side could you talk about.

Speaker Change #142: How long should we expect to see.

Speaker Change #141: Elevated global marketing level.

Speaker Change #141: During the conversion process.

Marc Thompson: I think in terms of sales and marketing expense, obviously, we tightly manage that and it's commensurate with growth. It's really doing that. It's very much part of the balancing growth and profitability motion. It has been relatively stable. I expect it to be operating in that range.

Speaker Change #143: I think in terms of sales and marketing expense, obviously, we tightly manage that commensurate with growth and really do it's very much part of the balancing growth and profitability motion.

Speaker Change #144: It has been relatively stable I expect it to be operating in that range, having said that.

Speaker Change #144: The organizational transformation initiatives, we've been we've been referring to.

Speaker Change #144: We've been developing into this year and as we start to execute into the second half along with some of the optimization initiatives. We do expect that we will continue to get more out of that investment.

Speaker Change #144: And.

Speaker Change #144: We will continue to drive growth investments, where we need to drive.

Speaker Change #144: Into our best solutions or wherever they offer the best revenue growth opportunities going forward from a product development standpoint is very similar we're investing obviously not just to keep our solutions currently within the market, but also investing in new solutions.

Marc Thompson: We're investing, obviously, not just to keep our solutions current within the market but also to invest in new solutions, such as EverPro Edge that we talked about at the end of last year and into this year, as well as continuing integrations of payments and so forth and other cross-sell initiatives. So that we would expect, you know, will continue to be within a band but, you know, continuing to invest behind growth as we continue to try to re-accelerate that growth profile going into 2025. If I could squeeze in one more,

Speaker Change #144: Such as ever pro edge that we've talked about.

Speaker Change #144: At the end of last year and into this year as well as continuing integrations with payments and so forth and other cross sell initiatives.

Speaker Change #144: So that we would expect we will.

Speaker Change #144: Continue to also be within a band but <unk>.

Speaker Change #144: <unk> to invest behind growth as we continue to try to reaccelerate that growth profile going into 'twenty five.

Speaker Change #145: Okay, if I could squeeze one more.

Eric Remer: Where would you say you are on the adoption curve for different customer groups in terms of payment? Obviously, on this goal, we've again highlighted Sloan from Kroner's, but I'm just curious how you're driving attachement in your other. Yeah, listen, it depends on the vertical. And it certainly depends on the solution within that. In certain places, we are further along the maturity of that based on the micro vertical and just the long term, you know, necessity of payments in the workflow.

Speaker Change #146: Where would you say you are in the adoption curve for different customer groups in terms of payments.

Speaker Change #147: Obviously on this call we again highlight that the prolonged.

Speaker Change #148: <unk>, but just curious on how you are driving attach.

Speaker Change #147: Vertical.

Speaker Change #147: Yes.

Speaker Change #149: It depends on the vertical and it certainly depends on the solution within that.

Speaker Change #149: Certain places we are further along the maturity of that based on the.

Speaker Change #149: The micro vertical.

Speaker Change #149: And.

Speaker Change #149: So just a long term necessity of payments and the workflow. So if you look at test control software. For example, we have long that has long been embedded in the solution of the system of action.

Eric Remer: So if you look at test control software, for example, we have long that has long been embedded in the solution of the system of action, the software solution as a core part of the workflow. And it's a requirement from that end contractor. And you know, penetration is definitely more on the mature side.

Speaker Change #149: Our solution is a core part of the workflow and its a requirement from that end contractor and penetration is definitely more on the mature side you can compare that to other places where we're still really early on in the maturity curve this could be.

Eric Remer: You can compare that to other places where we're still really early on in the maturity curve; this could be a place where we have introduced payments to that workflow in software within the last one to three years. And we're still ramping those penetration efforts. So it varies across the portfolio, and our management of that is really system of action software solution specific. Thank you very much for your time. Thank you. Our last question comes from Aaron Kimson of Citizens JMP. Your line is now open.

Speaker Change #149: A place where we have introduced payments to that workflow in a software within the last one to three years and we're still ramping those penetration effort. So it varies across the portfolio and our management to that is really.

Speaker Change #149: System of action software solutions specific.

Speaker Change #149: Okay.

Greener: Perfect. Thank you very much greener.

Speaker Change #167: Thank you.

Greener: Our last question comes from Erin Kimpton of citizens JMP. Your line is now open.

Operator: All right. Thanks so much, guys. I was talking to myself on mute earlier.

Erin Kimpton: Alright. Thanks, so much guys those positive myself on mute earlier I apologize can you give us an update on the ever helps consolidation is that trending ahead of the rest of these optimization and branch consolidations, where we won't see as much until 2025 and beyond given that you kind of started with ever house.

Operator: I apologize. Can you give us an update on the EverHealth consolidation? Is that trending ahead of the rest of these optimization and brand consolidations where we won't see as much until 2025 and beyond, given that you kind of started with EverHealth? Was the question, thanks Aaron, about EverPro or EverHealth? Yeah, so I think we've talked over the last couple of quarters about both the brand rollout and website optimizations. If you take a look at our core solutions, they're all by EverHealth, and the subproducts are by EverHealth,

Rob: Hi, Rob.

Rob: Was the question. Thanks, Darrin was it about ever pro.

Yes.

Speaker Change #152: So I think we've talked over the last couple of quarters about both the brand rollout and website optimization. If you take a look at our core solutions Theyre all by ever health the sub products by ever health we've.

Operator: We've invested over the past couple of months in bringing new leadership from a commercial go-to-market perspective, which has started to see the fruits of those investments from a conversion improvement perspective, or an increase in ASP, and actually a reduction in sales cycle time. And when you look at payment enablement attached to new customer acquisition, we increased that from the low 30s in Q1 to the mid 50s in Q2. So my answer would be we've seen good progress in terms of both the transformation and the optimization of how we are going to market and bringing those products into the market to deliver value to both new customers and the existing customers that continue to expand their share of wallet with us.

Speaker Change #152: We've invested over the past couple of a couple of months and bringing new leadership.

Speaker Change #152: From a commercial go to market perspective, which is <unk>.

Speaker Change #152: Started to we're starting to see the fruits of those investments.

Speaker Change #152: Conversion improvement perspective or increase.

Speaker Change #152: Asps.

Speaker Change #152: And actually a reduction in sales cycle time.

Speaker Change #152: And when you look at payment enablement attach on new customer acquisition, we increased that from the low <unk> in Q1 to the mid <unk>.

Speaker Change #152: In Q2, so my answer would be we have seen good progress in terms of both.

Speaker Change #152: Both the transformation.

Speaker Change #152: And the optimization of how we are going to market and bringing those products.

Speaker Change #152: In into the market to deliver value to both new customers and the existing customers that continue to expand their share of wallet with us.

Operator: And I would just add, I think you asked, when we think about the broader transformation program, does that follow EverHealth? And absolutely, certain components of what we have done at EverHealth over the last year plus, when you look at our other verticals, specifically EverPro, operational consolidation like we've done at EverHealth, that's a model that we will follow, as well as brand consolidation. Product consolidation will look different across our verticals, but certainly, some form factors of what we've done in EverHealth will follow at EverPro.

Speaker Change #152: I would just add I think you asked is that.

Speaker Change #153: When we think about the broader transformation program does that follow ever health, absolutely certain components of what we have done it a number of health over the last year plus.

Speaker Change #154: When would you look to our other vertical specifically ever pro operational consolidation like we've done at ever health. That's a model that we will follow brand consolidation product consolidation will look different across our verticals, but certainly.

Speaker Change #154: Some form factors of what we've done in ever health will follow whatever pro.

Matthew Feierstein: That's very helpful. Thank you. And then maybe as a follow-up, I think Bill may have touched on this a bit, but are you seeing any increase in charge-offs or customers that are unable to pay on time? And then, just if not, how do you approach that?

Speaker Change #155: That's very helpful. Thank you and then maybe as a follow up I think Bill may have may have touched on this a bit but are you seeing any increase in charge offs or customers that are unable to pay on time and then if not how do you approach that it was it was a big theme on the zoom and I'll call out of.

Speaker Change #155: The year out at Evercore.

Speaker Change #157: Ever commerce thinks about it.

Operator: It was a big theme on the zoom info call last night. I'd love to hear how everyone, everywhere commerce thinks about it. So why don't I take a shot at that? I think, for the most part, our customers pay by credit card on a monthly subscription basis, or obviously, we're paid through the payments function in different ways. So we don't see a ton of that, and we really haven't seen any change where we do have receivables. We haven't seen any change in the pattern of behavior amongst our small business customers.

Speaker Change #158: So why don't I take a shot at that I think for the most part our customers.

Speaker Change #158: Pay by credit card on a monthly subscription basis.

Speaker Change #159: Obviously, we are paid on the payments functional in different ways. So we don't see a ton of that and we really haven't seen any change where we do have receivables we haven't seen any change in pattern of behavior amongst our small business customers.

Speaker Change #158: Okay.

Marc Thompson: Got it. Thank you very much. Thank you. This now concludes the question and answer session. I would now like to turn it back to Eric Remer for closing remarks. Thank you so much.

Speaker Change #158: Got it thank you very much.

Speaker Change #158: Thank you.

Speaker Change #160: This now concludes the question answer session I would now like to turn it back to Eric <unk> for closing remarks.

Eric Remer: You know, we were pleased with our results and look forward to continuing our transformation optimization throughout this year and through 25. And just want to make a follow-up remark, as this will be the last time Marc joins our Earnings College. That's a genuine thank you for all the work you've done over the past almost eight years as an organization. I grew up with Marc, and he's done an amazing job both providing value across the organization and also building a legacy within his organization. So we have the ability to promote from within and have a really great leader to step up.

Speaker Change #160: Thank you so much.

Speaker Change #162: We're pleased with our results and look forward to continuing our transformation optimization throughout this year and $3 25, and just wanted to have a following remark as this will be the last.

Operator: So thank you, Marc, for all your contributions. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Speaker Change #162: Mark joins our earnings calls that the gentlemen, thank you for all the work he has done over the past almost eight years.

Speaker Change #163: As an organization grew up with market has done an amazing job both.

Speaker Change #164: Providing value across the organization are also building a law.

Speaker Change #165: <unk> within his organization. So we have the ability to promote from within and have a really great leader to step up. So thank you Mark for all your contributions.

Speaker Change #166: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Q2 2024 EverCommerce Inc Earnings and Bussiness Update Call

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