Summary
EverCommerce posted revenue of $174.7 million for the quarter ended September 30, 2023, up 10.5% from the prior-year quarter. Revenue for the nine months ended September 30, 2023 was $505.9 million, up 10.2%. The quarter swung to an operating profit. Operating income was $6.3 million, a reversal from an operating loss a year earlier, and the operating margin of 3.6% was up 8.2 percentage points. For the nine months, operating income was $2.8 million and the operating margin was 0.6%, up 6.4 percentage points. Net loss was $0.6 million, an improvement of $15.2 million from the prior-year quarter, and diluted EPS was $0.00, up from a loss per share. The nine-month net loss was $22.3 million.
Adjusted EBITDA backs up the operating leverage. The non-GAAP measure reached $41.8 million, up 38.6% from the prior-year quarter, with 485 basis points of margin expansion. About 95% of revenue in the nine months ended September 30, 2023 was recurring or re-occurring, and the annualized net revenue retention rate was roughly 97% for the quarter. Excluding marketing technology, retention on the core software and payments business was above 100%. Pro forma revenue growth, which normalizes for acquisitions, was 10.3% for the quarter and 10.2% for the nine months. The company serves more than 685,000 customers. Marketing technology is the soft spot: it grew far more slowly than the recurring software and payments business, and it carries a heavier cost of revenue. Management called out modest macroeconomic pressure in the more transactional parts of the business.
Cash generation was a bright spot. Operating cash flow was $27.4 million in the quarter, up 101.6% from the prior-year quarter, and $68.6 million for the nine months, up 82.4%. Capital expenditures were just $0.9 million in the quarter, up 59.2% year over year. EverCommerce ended September 30, 2023 with $90.8 million of cash, cash equivalents and restricted cash, $190.0 million of available revolver capacity and $539.0 million outstanding on its term loans, which carried an effective interest rate of about 8.7% in the quarter. Two balance sheet lines bear watching. Deferred revenue of $24.6 million was down 2.6% from the prior-year quarter, and remaining performance obligations of $21.4 million were down 4.0%. Both hint at softer near-term billings even as reported revenue grows.
The board added $50.0 million to the share repurchase authorization on November 5, 2023, lifting the total to $150.0 million and extending the program through December 31, 2024. EverCommerce repurchased 160,000 shares for about $1.6 million during the quarter. Only $16.0 million remained available at September 30, 2023, which explains the top-up.
Guidance for the fourth quarter of 2023 puts Adjusted EBITDA at $35.5 million to $39.5 million. Full year 2023 guidance puts Adjusted EBITDA at $148 million to $152 million. On the top line, management guided fourth quarter and full year 2023 revenue around the same modest macro pressure it flagged in the transactional parts of the business. Debt is the biggest structural risk. The $539.0 million of term loans are floating rate, and swaps fix only $200.0 million of notional at 4.212% and $100.0 million at 3.951%, so a large slice of interest cost still moves with rates. The revolver carries a first lien leverage covenant of 7.50 to 1.00 that applies only when borrowings exceed 35% of commitments. EverCommerce also lists a material weakness in internal control over financial reporting, competition, customer retention, payment network compliance, inflation, a stronger dollar and supply chain disruption among its risks.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $174.7M | $170.1M | +2.8% | $158.1M | +10.5% |
| Research & development | $19.3M | $18.3M | +5.4% | $18.5M | +4.4% |
| Sales & marketing | $30.1M | $30.7M | -1.9% | $29.4M | +2.2% |
| General & administrative | $31.5M | $35.1M | -10.1% | $32.2M | -1.9% |
| Total operating expenses | $168.4M | $168.3M | +0.1% | $165.4M | +1.9% |
| Operating income (loss) | $6.3M | $1.8M | +253.1% | -$7.3M | +186.8% |
| Operating margin | 3.6% | 1.1% | +2.5 pp | -4.6% | +8.2 pp |
| Net income (loss) | -$614.0K | -$896.0K | +31.5% | -$15.9M | +96.1% |
| Net margin | -0.3% | -0.5% | +0.2 pp | -10.0% | +9.7 pp |
| Diluted EPS | $0.00 | $0.00 | ±$0.00 | -$0.08 | +$0.08 |
| Customers | 685,000 | — | — | — | — |
Risks
EverCommerce's MD&A states the macroeconomic climate continues to see pressure from international geopolitical conflict, terrorism, COVID-19, rising inflation, the strengthened US Dollar, rising interest rates and supply chain disruptions. These developments have had and may continue to have an adverse effect on revenues, demand for products and services, and costs of doing business.
Higher interest expense on the Credit Facilities increased by $13.8 million for the nine months ended September 30, 2023. As of September 30, 2023, $539.0 million was outstanding under the Term Loans, with an effective interest rate of approximately 8.7% for the three months ended September 30, 2023, exposing liquidity to variable-rate debt.
Revenue from Marketing Technology Solutions increased only 1.5% for the three months ended September 30, 2023 and 1.7% for the nine months ended September 30, 2023 compared to prior-year periods. This segment generally has a higher cost of revenue as a percentage of revenue than Subscription and Transaction Fees, so faster growth in this lower-margin mix could negatively impact cost of revenues as a percentage of revenue.
EverCommerce reported an annualized net revenue retention rate of approximately 97% for the quarter ended September 30, 2023, while the core software and payments solutions excluding marketing technology had a rate greater than 100%. This indicates contraction or attrition within the marketing technology customer base.
EverCommerce has acquired 53 companies since inception and expects to consummate acquisitions of complementary businesses in the future that could require additional equity or debt financing. Market and macroeconomic conditions may impact the ability to raise capital, and failure to raise funds when desired could adversely affect the business, financial condition and results of operations.
SaaS KPIs
All quarters →Total Customers
Pro Forma Revenue Growth Rate
Adjusted Gross Profit
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from EverCommerce Inc.'s SEC filings for Q3 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.