EverCommerce Inc. (NASDAQ:EVCM) Q4 2022 Earnings Call Transcript

Matt Feierstein: Yeah. Again, I think — we’ve discussed in the past, from an organic growth lever standpoint, obviously, customer growth one gross lever; and then obviously, ARPU expansion, the other big growth lever. Saw a nice expansion from an ARPU standpoint. Obviously, customer growth fell a little bit from the prior year. As you probably see in some of our marketing expense in ’22, we did pull back on that as we navigated really the unknowns of the turbulent economic environment that — going forward, we still expect it to be a significant part of that lever so — of our gross lever. So we continue to expect that to run in a healthy range of where it has been in the past from that perspective.

Eric Remer : And just the second part of the question, thank you for the question. The health care services, which represents more than half of our business, continues to operate at the fastest growth levels, and we continue to see that. Health services, which our second largest vertical, is our second fastest-growing vertical. And then our fitness and wellness is just really distinctly broken up into kind of the fitness and then the launch of spas. Spas and spas are doing great. In general, this is not necessarily specifically EverCommerce. We just have not fully recovered from the pre-COVID level. So that particular category remains relatively flat to pre-COVID levels versus the growth we’re getting from the other verticals. Fortunately, that’s our smallest vertical. So it does have the biggest impact of that in terms of the verticals, in terms of how we look at that kind of breakout.

Jeremy Sahler : Got it. Thank you. That’s helpful color. And then on the M&A front, I guess, what are you guys seeing in terms of private valuations? And I guess, in terms of — what are your priorities for M&A going forward?

Eric Remer : Yeah. The priorities remain the same, be diligent and find opportunities that we think are going to add value to the overall ecosystem for EverCommerce and provide more value to our customers. I feel like I’m a broken record over the last sub quarters to be — the dislocation between valuation and the private and public markets remains — private market valuations remain kind of very healthy, really never took the kind of downward stream that some of the public — large public comps have taken. So we’ve looked at a lot of things. There’s been a few things that have been interesting. But for both fit or potential value, didn’t make sense for us at this point.

Jeremy Sahler : That’s helpful. Thanks for taking question, guys.

Operator: The next question comes from Bhavin Shah with Deutsche Bank. Please go ahead.

Bhavin Shah : Hey, thanks for taking my question. I guess, Eric, just at a high level, just from a demand environment perspective, can you maybe just a little bit more elaborate on what you saw during 4Q and maybe what you’re seeing at the end of the year in terms of the macro? Is it still mostly impacting the marketing side of the business? Or are you seeing some of that slower on the subscription side?

Eric Remer : Really, on the marketing side of the business — and I would say that has really flattened out in terms of — the pullback we saw in Q3 really kind of relevel set, and that has kind of continued through Q4 and our expectation through Q1 and beyond. So it hasn’t necessarily degregated worse than we had thought at the kind of Q3 time periods. But the other verticals we have not seen kind of segregation and acquisition or acquisition metrics at this point. So I think we’re — the marketplace that we’re in, I think it sometimes gets lost big picture that we have almost 700,000 customers across a lot of different verticals. And we see a continued opportunity to grow in all the core verticals that we’re in.