EngageSmart, Inc. (NYSE:ESMT) Q2 2023 Earnings Call Transcript

Cassandra Hudson: Of course. I mean, I think the trend in Enterprise has existed for a while where we’re continuing to onboard larger and larger customers. So that is definitely driving the overall ARPU up and contributing to our growth, and also digital adoption, right? Our digital adoption continues to increase and exceed our expectations and that’s contributing to revenue as well. And I think even more broadly speaking, on the Enterprise business, those are the two drivers of overall revenue growth, largely. Getting new customers live, ramping them up on our solution and then driving increased rates of digital adoption over time. And I think both of those continue to deliver superior results for us as it relates to Enterprise.

Tyler DuPont: Okay, great. I appreciate that. Thank you very much.

Operator: Thank you. Our next question will come from Terry Tillman with Truist Securities. Your line is open.

Terrell Tillman: Yes, Bob, Cassandra and Josh. I think if I got this right, it was Hubba Bubba. That’s great.

Robert Bennett: You got it right.

Terrell Tillman: Yes, awesome. Haven’t heard that one before. So first question is, it’s a multi-parter on the acquisition and the new technology that you get from the acquisition. And then, Cassandra I had a follow-up for you on revenue cycle management. But first, in terms of your install base right now of 180-or-so-thousand clinicians, how much of your current customer base actually prescribes versus doesn’t prescribe right now? And then the second part is, Cassandra, that was helpful in terms of this was a roadmap item on e-prescribe. Would this be like an add-on, you think, as you move into next year? Or would it just go into one of those SKUs that you have? And then I had a follow-up for Cassandra.

Robert Bennett: So, very small percentage, Terry, of our customers today prescribe. I mean, it’s in the – a few hundred. And they’re obviously not using SimplePractice for e-prescribe because we haven’t had that. That’s been, as you said, a roadmap item. So, very excited about expanding that. And yes, it obviously has long-term implications for us in our ability to provide e-prescribe in the future to beyond psychiatry and to other medical specialties. Does that answer your question?

Terrell Tillman: It did. As it relates to – it did, but I guess a follow-up on that. I mean, should we look to 2024 in terms of maybe how this shakes out, whether it’s almost like a telemedicine add-on or it would just kind of flow into one of the higher valued SKUs?

Robert Bennett: Yes. I mean, that will be bundled in, as we continue to refine our pricing packaging over time, but anticipate that, that’s bundled in and available to all of the customers that have the need for that over time.

Terrell Tillman: Okay. Wonderful. And then, Cassandra, in terms of revenue cycle management, I know it’s early days, but do you think this could start to leave a mark in ’24? And would it be more of a processing revenue stream or subscription revenue stream? Nice job on the quarter.

Cassandra Hudson: Sure. Thanks Terry. I guess, first and foremost, it’s processing revenue for us, and we are generating revenues through RCM today. I think RCM is a longer-term play just given the dynamics in place in the market. So we know today that there is a reluctance among providers to accept insurance just given the challenges administratively there. So we’re trying – we’re looking to solve those problems, and we think there is a ton of demand from therapy seekers and just people more broadly to increase coverage for mental health from the insurance network. So as that changes, I think we’ll start to see more and more revenue out of RCM, but I do think it is a longer-term part of our story.

Operator: Thank you. Our next question comes from Scott Berg with Needham. Your line is open.