Summary
EverCommerce reported fourth-quarter revenue of $169.44 million, up 4.7% from the prior-year quarter. Full-year revenue was $675.369 million, up 8.8%. The company said the increase came from organic growth, more customers and price increases across its portfolio. Its Pro Forma Revenue Growth Rate was 8.6% for the full year. The customer base grew from over 685,000 at the end of 2022 to approximately 708,000 at the end of 2023. Retention remained strong: the net pro forma revenue retention rate was approximately 95% for the quarter ended December 31, 2023, while the core software and payments net revenue retention rate was approximately 100%. About 97% of revenue in 2023 and 2022 was recurring or re-occurring. The company said the majority of revenue growth came from successful delivery of system of action capabilities to SMBs in home services, health and wellness.
Profitability improved at the operating line but stayed negative below it. The fourth-quarter operating loss narrowed to $0.361 million. For the full year, operating income was $2.426 million, a swing from an operating loss in the prior year. Operating margin was -0.2% in the quarter, up 2.1 percentage points, and 0.4% for the full year, up 5.3 percentage points. The fourth-quarter net loss was $23.335 million, and the loss widened from the prior-year quarter. The full-year net loss was $45.620 million, and the loss narrowed. Diluted EPS for the full year was -$0.24, and the loss narrowed from the prior-year period. Adjusted EBITDA was $155.619 million for 2023, up from $119.049 million in 2022. Adjusted gross profit was $444.362 million, up from $403.371 million.
Cash generation accelerated. Fourth-quarter operating cash flow was $36.018 million, up 32.5% from the prior-year quarter. Full-year operating cash flow was $104.605 million, up 61.4%. Capital expenditures were $0.897 million in the fourth quarter, up 118.2%, and $3.037 million for the full year, up 18.4%. Deferred revenue was $24.082 million, up 5.2% from the prior-year quarter. Remaining performance obligations were $20.400 million, down 10.5%. The company said higher cash collections from subscription and transaction fees and marketing technology solutions drove the increase in full-year operating cash flow, partially offset by higher interest payments and costs to deliver services. It also noted higher investments in personnel and infrastructure.
The quarter included strategic and risk developments. EverCommerce agreed to sell its fitness solutions to Jonas Software. The North American businesses, Club OS and ASF, closed simultaneous with signing, while the international businesses, ClubWise and MyPTHub, are expected to close during the third quarter of 2024. The company does not consider the sale a strategic shift that will have a material effect on its operations, so it does not qualify for reporting as a discontinued operation. Macroeconomic pressures remain a concern. The company cited global developments, terrorism, a future pandemic, rising inflation, fluctuations in the US Dollar, rising interest rates and supply chain disruptions as factors that have had and may continue to have an adverse effect on revenue, demand and costs. It also flagged risks tied to its acquisition strategy, including the possibility that recent growth rates may not be sustainable and that revenues and profits from acquisitions may be less than anticipated. EverCommerce has acquired 53 companies since inception and continues to pursue acquisitions, which brings integration and due diligence risk. The company completed no material acquisitions in 2023 or 2022, though it continues to pursue growth through a mix of organic revenue expansion and acquisitions. The company also noted that incremental investments will be needed in 2024 and beyond to support the ongoing transformation of its business and infrastructure, including Sarbanes-Oxley compliance. Management expects working capital requirements, capital expenditures, acquisitions, its repurchase program, debt servicing and lease obligations to be its principal liquidity needs going forward. The company recorded an impairment charge in the fourth quarter tied to its fitness asset group.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $169.4M | $174.7M | -3.0% | $161.8M | +4.7% |
| Research & development | $19.3M | $19.3M | -0.3% | $18.1M | +6.7% |
| Sales & marketing | $31.9M | $30.1M | +6.0% | $29.5M | +8.0% |
| General & administrative | $30.7M | $31.5M | -2.7% | $35.7M | -14.1% |
| Total operating expenses | $169.8M | $168.4M | +0.8% | $165.5M | +2.6% |
| Operating income (loss) | -$361.0K | $6.3M | -105.7% | -$3.7M | +90.2% |
| Operating margin | -0.2% | 3.6% | -3.8 pp | -2.3% | +2.1 pp |
| Net income (loss) | -$23.3M | -$614.0K | -3700.5% | -$17.8M | -31.3% |
| Net margin | -13.8% | -0.3% | -13.4 pp | -11.0% | -2.8 pp |
| Diluted EPS | -$0.12 | $0.00 | -$0.12 | -$0.09 | -$0.03 |
| Customers | 708,000 | 685,000 | +3.4% | 685,000 | +3.4% |
Risks
Most customer contracts are open-ended and terminable by either party without penalty on about 30 days notice, and SMB customers often have higher business failure rates and limited resources. The company served approximately 708,000 customers at the end of 2023, with net pro forma revenue retention of approximately 95% for the quarter ended December 31, 2023.
Failure to comply with payment card network rules or payment processor agreements with Worldpay and PayPal could suspend or terminate registrations and ISO or payment facilitator agreements. Payment-related transactions comprised approximately 17% of revenue in 2023, and loss of Visa and MasterCard processing access would eliminate substantially all revenue.
The company has significant variable-rate Term Loans outstanding, and MD&A states interest and other expense, net increased in 2023 driven primarily by higher interest expense from increased variable base interest rates. Rising rates could continue to pressure profitability, and net loss widened to $23.34 million in Q4 2023 from $17.77 million in Q4 2022.
The company collects and processes sensitive payment card data and health care-related information, and has ultimate liability under payment network rules for failures by distribution partners and third parties. A significant breach could lead to fines, litigation, loss of payment network access or bank sponsorship, and reputational harm.
Macroeconomic pressure from rising inflation, interest rates, supply chain disruptions and geopolitical conflicts could reduce service SMB demand and raise costs. For the year ended December 31, 2023, revenue increased 8.8% to $675.37 million, but marketing technology solutions revenue decreased 1.1%, which MD&A attributes primarily to a reduction in demand driven by decreases in consumer spending.
The company faces intense competition in fragmented markets from manual processes, homegrown solutions, vertically specialized platforms and horizontal competitors including Salesforce, Intuit, Square and HubSpot. Competitors may have greater resources and partners could become competitors, potentially causing market share decline or pricing pressure.
On January 31, 2024, a putative class action was filed in Delaware Chancery Court against the Company, Board members and Sponsor Stockholders challenging the Sponsor Stockholders' CEO Approval Right as an unlawful limit on Board authority. The plaintiff seeks declaratory judgment that the right is invalid and void, which could create governance uncertainty.
The company uses independent contractors in India, Russia, Ukraine and Jordan for software development, and ongoing conflict in Ukraine and Israel or escalation of tensions could disrupt or delay these resources. Dependence on third-party contractors also creates development quality and control risks.
Revenue growth has been driven significantly by acquisitions, with 53 companies acquired since inception, and MD&A says the pace of acquisitions has slowed. Revenue increased 8.8% to $675.37 million for the year ended December 31, 2023, but the historical CAGR of 26.0% from 2020 to 2023 may not be sustainable.
Marketing Technology Solutions have lower margins and higher cost of revenue as a percentage of revenue than subscription and transaction fees. For the year ended December 31, 2023, subscription and transaction fees revenue increased 11.8% while Marketing Technology Solutions revenue decreased 1.1%, and further growth of lower-margin marketing technology could pressure aggregate margins.
MD&A discusses an impairment charge on the fitness asset group in Q4 2023 and a March 2024 agreement to sell the fitness solutions in two closings. The sale may not deliver expected benefits and could distract management or require further adjustments.
MD&A states incremental investments will be needed in 2024 and beyond to support ongoing transformation and Sarbanes-Oxley compliance. These costs may negatively affect short-term profitability, even as operating income swung to a profit of $2.43 million for the year ended December 31, 2023.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from EverCommerce Inc.'s SEC filings for Q4 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.