EverCommerce Inc. (EVCM) Q3 2025 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to EverCommerce's Third Quarter 2025 Earnings Call. My name is Jonathan, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded today, Thursday, November 6, 2025. And now I'd like to turn the conference over to Brad Korch, Senior Vice President and Head of Investor Relations at EverCommerce. Please go ahead, sir.

Good afternoon, and thank you for joining. Today's call will be led by Eric Remer, EverCommerce's Chairman and Chief Executive Officer; Josh McCarter, EverPro's Chief Executive Officer; and Ryan Siurek, EverCommerce's Chief Financial Officer. Joining them for the Q&A portion of the call are EverCommerce's President, Matt Feierstein; and EverHealth's Chief Executive Officer, Evan Berlin. This call is being webcast with a slide presentation that reviews the key financial and operating results for the 3 months ended September 30, 2025. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce website, www.evercommerce.com. The slide presentation and earnings release are also directly available on the site. Please turn to Page 2 of our earnings call presentation while I review our safe harbor statement. 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. 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. We will also refer to certain non-GAAP financial measures in our comments today. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation. As a quick reminder, following our announcement in March that we are seeking strategic alternatives for the Marketing Technology solutions, we had classified Marketing Technology as discontinued operations. Last week, we announced the sale of this business to Ignite Visibility. Our commentary today will center on the continuing operations of our business focused on our EverHealth, EverPro and EverWell verticals. All financial and operating metric results are presented relating to continuing operations only unless otherwise specified. I will now turn it over to our CEO, Eric Remer. Please continue.

Thank you, Brad. On today's call, I will highlight both third quarter results and our recent acquisition of an AI Agentic platform that we believe will accelerate our AI development before turning the call over to Ryan to discuss our financial performance in more detail. During the third quarter, EverCommerce generated revenue of $147.5 million within the previously provided guidance range. This represents a 5.3% year-over-year growth, both on a reported and pro forma basis as we fully lap the sale of the fitness solutions and the acquisition of ZyraTalk had an immaterial impact on the quarter. Adjusted EBITDA of $46.5 million beat the top of our guidance range, representing a margin of 31.5%. Adjusted EBITDA margin expanded 140 basis points year-over-year. Payments revenue grew 6% year-over-year as we continue to invest in product and go-to-market motions to grow our total payments volume. The most exciting development in the quarter was the strategic acquisition of ZyraTalk, a best-in-class AI Agentic platform company, highly focused on the field service management industry, which will serve as the center of our AI acceleration efforts. Finally, on October 31, we closed the sale of our marketing technology solutions to Ignite Visibility. As we continue to execute EverCommerce's transformation optimization program, we believe narrowing our focus to provide best-in-class AI-powered vertical software is the most effective path to maximize long-term growth, margin accretion and ultimately, shareholder value. The completion of this transaction allows us to focus our energy and resources on our core SaaS and payments business. EverCommerce provides SaaS solutions for the service SMB economy. We offer tremendous value to our customers by providing system of actions necessary to run their business with tailored unique workflows. We provide end-to-end solutions to more than 725,000 customers across our 3 major verticals, EverPro for home field services, EverHealth for physician practices and EverWell for wellness service providers, with the 2 former verticals representing approximately 95% of consolidated revenue. Our large base of customers represents an immense embedded opportunity to provide value-added features and services like payments and customer rebates for our purchasing programs. On a pro forma basis for the last 12 months, we generated $585.1 million of revenue, representing a 7.6% year-over-year growth. We also generated 31% of adjusted EBITDA margin on an LTM basis. Finally, our annualized total payments volume, or TPV, expanded to approximately $13 billion. As I've highlighted in the past, accelerating payments adoption and utilization continues to be one of our highest priorities. In 2025, we have continued to make specific investments in our product capabilities and go-to-market motions to prioritize payments enablement, activation and utilization. Our results for the third quarter show continued progress against this goal with strong growth in both payment enablement and utilization. At the end of the third quarter, 276,000 customers were enabled for more than one solution, reflecting a 33% year-over-year growth. At the end of the third quarter, approximately 116,000 customers were actively utilizing more than one solution, reflecting a 32% year-over-year growth. Enabling customers to more than one solution is a first step in the funnel that leads to increased revenue, retention and ultimately profitability to these customers. We continue to focus the majority of our efforts on the front book attach or the enablement of payments at the point of initial SaaS sale, but we also focus on our back book cross-sell motions. We are expanding our customer success capabilities to boost activation, retention and wallet share, and we've streamlined and improved our onboarding workflows. In the third quarter, our front book attach rates in our 2 flagship system of actions within EverPro and EverHealth verticals were both greater than 60%, which represents significant year-over-year improvements. Looking back over the trailing 12 months, our annualized net revenue retention, or NRR, was 97%. Customers that purchase and utilize more than one solution are naturally some of our most profitable and stickiest customers with an NRR of greater than 100%. Year-over-year, our payments revenue grew 6% and accounted for approximately 21% of overall revenue. As a reminder, we report our payments revenue on a net basis, and therefore, it incrementally contributes approximately 95% gross margin. As such, payments revenue growth is meaningful contributor to our overall adjusted EBITDA margin expansion. As I mentioned in my introductory comments, third quarter estimated annualized total payments volume, or TPV, was approximately $13 billion, representing nearly 5.2% year-over-year growth. Within this, we continue to see higher TPV growth in our Top solutions, offset by lower growth in legacy payment products and third-party partners. This can be a positive mix shift over time as our top solution often have higher take rates. In mid-September, we announced the acquisition of ZyraTalk, an AI-powered customer engagement solution that combines virtual assistant capabilities with an Agentic automation platform. The acquisition helps to establish EverCommerce's position as an AI-driven innovator, beginning with intended near-term application in our home and field service vertical, EverPro. We plan to extend into broader opportunities across the company. I will now turn the call over to Josh McCarter, CEO of EverPro, to discuss ZyraTalk in more detail. Josh?

Thanks, Eric. ZyraTalk transforms how businesses operate by replacing outdated processes with intelligent end-to-end AI workflows. The platform is an AI-powered customer engagement solution that combines virtual assistant capabilities with Agentic automation, primarily serving the home services industry and capabilities for serving our other verticals. Its AI receptionist ensures that no call, lead or customer interaction is ever missed, while the Agentic AI capabilities integrate deeply with FSM platforms to automate the core of daily operations. To date, the platform has processed over 2 million chats and 2 million minutes of voice interactions through its integrations with major FSMs. The fully autonomous AI agents and a lightweight Agentic FSM system are designed for seamless integration across EverPro's platforms. The acquisition brings AI at scale to EverCommerce with many in-production features that are both being sold to third-party customers today and being fast tracked for multiple EverPro native integrations over the coming months. Some of the key features available today are the AI Receptionist, AI Scheduler and AI Dispatch. The AI receptionist answers inbound inquiries instantly, books jobs, answers questions and routes calls 24/7, just like a front desk that never goes offline. AI Scheduler allows customers to book, reschedule or cancel appointments any time by phone or online. The AI Dispatcher automatically assigns the right technician to the right job based on skill, location and availability, keeping field teams efficient without human oversight. These and the additional features shown on the slide automate the full workflow from first contact to final payment, improving response time, reducing labor and helping to drive revenue. Beyond this foundation, we are working to add more features and offerings to support our customers, beginning in our home and field services solutions. In addition to the full integration into many EverPro systems of action, we are actively developing new Agentic capabilities that should roll out over the next 12 months. These include an AI project manager that keeps every job on track from first call to final review, updating customers and tech automatically. We're working on an AI training and QA agent that listens to calls and gives real-time coaching to technicians like a built-in quality manager. We plan to utilize the underpinnings of our Service Nation platform to deliver an AI business coach. And of course, we are planning to use the Agentic capabilities to better onboard customers to our payments and rebates platforms. Together, these upgrades significantly improve the customer experience by bringing AI capabilities with full end-to-end automation, boosting efficiency and revenue without adding headcount.

Thanks, Josh. ZyraTalk is a strategic AI investment that will help drive our long-term growth while delivering greater value to our customers. The acquisition brings us a production-ready AI platform, a highly skilled technical team and a proven technology that's purpose-built for the service-based industries. Our customers, by definition, are subscale operators, plumbers with a truck or three, small physician practices and solo salon operators. To them, AI is a force multiplier, harnessing the power of AI provides them a 24-hour receptionist, a billing department and the not-so-distant future, a personal coach. We plan to leverage the AI and the capabilities acquired to increase the value proposition across all aspects of our solution set. Now I'll pass it over to Ryan, who will review our financial results in more detail as well as provide fourth quarter and updated full year 2025 guidance.

Thanks, Eric. Total reported revenue in the third quarter was $147.5 million, up 5.3% from the prior year period. Subscription and transaction revenue, our primary recurring revenue base was $142.2 million. For Q3 2025, year-over-year pro forma subscription and transaction revenue growth was 4.4%. Within subscription and transaction revenue, our core SaaS revenue grew over 8% in the quarter, partially offset by macro and tariff-related impacts in our more usage-based revenue streams such as rebates, which is our share of rebates through group purchasing programs within EverPro. Adjusted gross profit in the quarter was $114 million, representing an adjusted gross profit margin of 77.3% versus 78.1% in Q3 2024. Third quarter adjusted EBITDA was $46.5 million, which is a 10.3% growth year-over-year. Adjusted EBITDA margins of 31.5% compares to 30.1% in Q3 2024, representing margin expansion of 140 basis points. On a year-over-year basis, margins improved due to continued cost optimization initiatives, mix shift to higher-margin products and overall scale economies. Now turning to adjusted operating expenses, which are reconciled in the appendix to this presentation. Overall adjusted operating expenses improved as a percentage of revenue, both for the quarter from 48.1% to 45.8% on a year-over-year basis and on an LTM basis from 48.6% to 46.7%. While the timing of investments and expenses was a factor, the long-term trend of continued operating expense moderation is deliberate and attributable to both growth of the business and specific actions taken as part of our transformation and optimization programs. We maintain our focus on improvement in customer satisfaction and acquisition while also remaining highly focused on cost discipline and functional support areas. Next, I'll turn to some key liquidity measures, which include cash flow from continuing and discontinued operations. We continue to generate significant free cash flow as we invest to grow our business. Cash flow from operations for the quarter was $32.5 million, improving from the $27.5 million generated in Q3 2024. Leveraged free cash flow was $23.3 million in the quarter and for the trailing 12-month period, we generated more than $111 million in levered free cash flow. Adjusted unlevered free cash flow was $32.3 million in the quarter and $140.6 million for the last 12 months. As we continue to invest to accelerate growth, a portion of this investment is in our solutions. This is evident in our free cash flow metrics, which are largely flat year-over-year despite product investments, which increased our capitalized product development expenses. We ended the quarter with $107 million in cash and cash equivalents and $155 million of undrawn capacity on our revolver, which will step down to $125 million in July 2026. Cash declined on a sequential quarterly basis, primarily as a result of our strategic acquisition of ZyraTalk during the quarter. As of September 30, we had $528 million of debt outstanding. Our total net leverage as calculated for our credit facility was approximately 2.1x and continues to demonstrate our deleveraging with strong operational performance and free cash generation. We have $425 million of notional swaps at a weighted average rate of 3.91% that effectively hedge the floating rate component of our interest cost through October 2027. In the third quarter, we repurchased approximately 2.6 million shares for $29.1 million at an average price of $11.10 per share. Based on the shares repurchased through September 30, 2025, we have approximately $22.3 million remaining in our total repurchase authorization. In addition, our Board recently authorized an increase in our share repurchase program to $300 million, an increase of $50 million through the end of 2026. I would now like to finish by discussing our outlook for the fourth quarter and the full year of 2025. As a reminder, our guidance for revenue and adjusted EBITDA for 2025 is based on our continued operations, which excludes Marketing Technology Solutions. Our guidance also includes ZyraTalk, but the expected contribution in the fourth quarter is immaterial. For the fourth quarter of 2025, we expect total revenue of $148 million to $152 million and adjusted EBITDA of $39.5 million to $41.5 million. For the full year 2025, we are narrowing both our revenue and adjusted EBITDA guidance ranges with an increase to the top end of the adjusted EBITDA range. We expect total revenue of $584 million to $592 million and adjusted EBITDA of $174.5 million to $179.5 million. Operator, we are now ready to take the first question.

And our first question comes from the line of Bhavin Shah from Deutsche Bank.

Eric, maybe just to start off with you. I just want to dig into the ZyraTalk acquisition, which kind of seems compelling to us. Can you just maybe talk a little bit more about the business model? Is it subscription consumption-based? And over time, what percentage of your customer base do you think this will be suitable for as you think about the key solutions that you might attach to?

I appreciate the question. At a high level, we're not kind of breaking out the basis of kind of subscription versus integrated to the rest of the system at this point. As we look at the actual acquisition, there's really 2 main things that we're really excited about. Number one, this particular product has been built fully -- like fully focused on the home service sector. So all of the data, all the minutes, all the calling that they have done over the last really 3 to 4 years has been fully focused basically to our customer base. So it's a turnkey product that will allow to integrate almost real time, and we'll talk about the integration in a second. Secondly, a lot of the development that they have done within the ecosystem for the Agentic AI within their core product is going to be utilized across our core system. So as we see the kind of the future of how those products come together, I think you'll start seeing in late '26 and '27, how that kind of integrates together versus a breakout of ZyraTalk's revenue separately. Want to add to that, Ryan?

I think with everything that Eric said, we plan to fully integrate. There is a book of business that comes with ZyraTalk. That wasn't our primary thesis though for the acquisition. The primary thesis was the integration that Eric just described in terms of the capabilities that it's going to bring to the SMB space, particularly in the home and field services. But I would say that over time, we plan to expand to the other verticals that we have as well. And you should expect to see this kind of as bolt-ons or upsell, cross-sell motions as we continue to build out that strategy.

Got it. That's helpful there. Ryan, just kind of a follow-up for you. Just can you just maybe elaborate what played out with the rebate program? Can you just, I guess, think about the overall size of that program and kind of what's factored into guidance from that program as you think about 4Q?

Yes. I would say that, that was probably the one space that we had any particular headwinds in the business in Q3. The core SaaS business, as we described, is very resilient and strong, particularly in the SMB market. Rebates as a percentage of our overall revenue base is quite small, actually. But from the quarter-over-quarter perspective, there was about $1.6 million of softness. And the rebates are really just group purchasing programs that we have as part of our Service Nation program overall. It's a good business for us, but it does actually have a little more susceptibility to the macroeconomic factors and tariffs in particular, were probably one of the areas where we saw some impact. If you saw the HVAC manufacturers that released earnings earlier, there was a number of citings with regard to kind of softness in that space, not only for Q3, but some projection into Q4 with expected recovery in 2026. That is kind of where we saw some of the softness in that space as well. But overall, I would say that -- and it's not a significant impact to the business. We did factor that into our overall guidance and don't expect a significant continuation.

And our next question comes from the line of Kirk Materne from Evercore ISI.

This is Bill on for Kirk. I was wondering if maybe you could walk us through, I guess, some of the changes to the guidance for the remainder of the fiscal year and kind of any trends you're seeing in the macro environment that have caused you to change your guidance?

I just gave certain information on that, Kurt. Thanks for the question. I'm trying to make sure I understood and heard your question. From a guidance perspective, no macroeconomic impacts other than one we described on the group purchasing programs, which really is a small portion of our overall revenue base. From an SMB perspective, overall, we're continuing to see strength in the marketplace and our core SaaS continues to have strong growth opportunities. We've seen 8% growth really from a core SaaS perspective. And then I would say that we continue to have really strong efforts in the transformation optimization side of what we're doing, which is why we felt very comfortable to increase our adjusted EBITDA guidance for the full year. But we did tighten the range both on revenue and on adjusted EBITDA and taking into account some of those macroeconomic impacts that we talked about earlier.

And our next question comes from the line of Matt Hedberg from RBC.

Eric, I wanted to go back to the ZyraTalk acquisition. I just -- maybe it wasn't clear to me, but how is the pricing for that today? And do you see it evolving once it's fully integrated to the platform?

Yes. So just on a core basis, the product that they're in market with today sells both on a subscription and usage basis. So subscription by utilizing the product and usage every time, every minute that it's been utilized on an AI Receptionist. The reason the larger answer was really focused on that was a part of the thesis, but really kind of a smaller part of the overall thesis for the acquisition. So as Ryan talked about, that we definitely brought over customer base and a book of business. And the real focus of us is the customer base that is utilizing that product today is actually just making our systems smarter and smarter. So as we integrate ZyraTalk into the core EverCommerce solutions, which we've already done, and Josh can talk about that in a second, our ability to integrate that, the assist to start off and the other Agentic pieces of that software is going to make all of our software specifically the FSM area, just more effective on an ongoing basis. So do you want to add to that, Josh?

Yes. I think from a pricing standpoint, we definitely view this as a SaaS model. So for the AI receptionist, we'll be selling that as a SaaS model. And then as Eric mentioned, we will be integrating various AI agents throughout our FSM systems, and that will just be reflected over time as increases in SaaS pricing.

Got it. Okay. That's helpful. And maybe just even just like more philosophically speaking, one of the questions about software has been -- what is the future of seat-based models in the future? And I'm just sort of curious, you've got a blend today, and obviously, payments is a big part of that non-seat-based model. But do you see the future of EverCommerce pricing changing to look even more like consumption or usage and pivoting away from seats? Or do you always expect to have some sort of a blend there?

I think we would -- I mean we're going to continue with the existing pricing mechanisms that we have. We'll continue to evaluate the market space in general. I think our space from an SMB perspective is quite unique. If we see the opportunity to do more in the variable type pricing as we think about the 2026 budget and beyond, we will definitely consider that. But it's not a strategic shift or focus from a change perspective in terms of how we run and operate our business.

[Operator Instructions] Our next question comes from the line of Alex Sklar from Raymond James.

This is Jessica on for Alex. Just got one. So on your spending optimization efforts, how have things been progressing there? Margins continue to track nicely in the right direction. But on the reduction of third-party costs you've called out in the past, how much more leverage do you see over the medium term?

Yes. We continue to find good success in our transformation optimization program. I would say that we've been able to reduce operating costs pretty substantially, over $10 million in 2025. We continue to have a really solid tracking mechanism against those efforts. I think you're going to see us to continue the transformation optimization program that we have in place is not a one and done. It is something that we are kind of continuing to embed in the operating model that we have overall. We're at over 30% adjusted EBITDA margins at this point in time. That's grown since the days of our IPO in the low 20% adjusted EBITDA margin, so over 1,000%. And we continue to see opportunity for us to expand on the overall margin expansion through the programs that we have, both for transformation and for optimization. The management teams are stood up at this point in time, both for EverPro and EverHealth. And we feel like that is putting us in a solid position to continue to exit 2025 and grow in '26, but not just from a revenue perspective, and we'll continue to look for margin expansion as we move into the future. I would say that the only thing that I would moderate on that is that as we continue to look at investment opportunities, we'll continue to focus to make sure that the products that we're offering to our customers have the right features and functionality. So we're going to continue to grow and invest in those. And you can see that from a cash flow perspective in terms of the investment that we've made in capitalized software year-over-year. I think we invested on an LTM basis about $25 million compared to about $18 million in the prior year, which just continues to demonstrate our continued focus on developing products for our customers.

And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Eric Remer, CEO, for any further remarks.

Thanks. Well, thank you again for joining the call today. We have incredible momentum in our core SaaS and payment solutions, combined with meaningful margin expansion as we continue to optimize our cost base. On top of this, there is tremendous excitement surrounding our AI road map that we believe will differentiate our solutions in the marketplace. I'd like to thank our investors for their continued support and all of our EverCommerce employees for their hard work. Operator, this concludes our call.

Thank you. And thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.