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What changed in EverCommerce Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of EverCommerce Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+420 added−448 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-16)

Top changes in EverCommerce Inc.'s 2023 10-K

420 paragraphs added · 448 removed · 339 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur human-first culture has been built upon our values and they are a critical part of how we behave, lead and engage with our people. Our values reflect who EverCommerce is and serve as our guiding force on how we plan to achieve our organizational objectives.
Biggest changeWe are committed to not making employment (including hiring, promotion, and compensation) or other contracting decisions on the basis of legally protected characteristics, except to the extent required or permitted by law. Our human-first culture has been built upon our values and they are a critical part of how we behave, lead and engage with our people.
See “Risk Factors—Risks Related to Intellectual Property—We may be unable to adequately protect and enforce, and we may incur significant costs in enforcing or defending, our intellectual property and other proprietary rights.” Corporate Information We were initially formed under the laws of the state of Delaware in September 2016 under the name PaySimple Holdings, Inc., with “EverCommerce” being our “doing business as” name.
See “Risk Factors—Risks Related to Intellectual Property—We may be unable to adequately protect or enforce, and we may incur significant costs in enforcing or defending, our intellectual property and other proprietary rights.” Corporate Information We were initially formed under the laws of the state of Delaware in September 2016 under the name PaySimple Holdings, Inc., with “EverCommerce” being our “doing business as” name.
We provide tailored, end-to-end Software-as-a-Service (“SaaS”) solutions that support the highly diverse workflows and customer interactions that professionals in home services, health services, and fitness & wellness services need to automate manual processes, generate new business, and create more loyal customers. EverCommerce is a leading provider of integrated, vertically-tailored SaaS solutions for service-based small- and medium-sized businesses (“service SMBs”).
We provide tailored, integrated Software-as-a-Service (“SaaS”) solutions that support the highly diverse workflows and customer interactions that professionals in home services, health services, and fitness & wellness services need to automate manual processes, generate new business, and create more loyal customers. EverCommerce is a leading provider of integrated, vertically-tailored SaaS solutions for service-based small- and medium-sized businesses (“service SMBs”).
Our verticals Our solutions, many of which we believe are the market leaders in their industries, are deployed in verticals that are comprised of numerous micro-verticals, which through product development and new solution acquisition, offer natural growth opportunities for EverCommerce.
Our verticals Our solutions, many of which we believe are market leaders in their industries, are deployed in verticals that are comprised of numerous micro-verticals, which through product development and new solution acquisition, offer natural growth opportunities for EverCommerce.
The product management organization partners closely with our marketing, sales and customer teams to hear market insights and VoC feedback to improve retention and wallet expansion, build stronger integrations between solutions and pursue adjacent market penetration opportunities.
The product strategy and management organization partners closely with our marketing, sales and customer teams to hear market insights and VoC feedback to improve retention and wallet expansion, build stronger integrations between solutions and pursue adjacent market penetration opportunities.
We go to market with suites of solutions that are aligned to our three core verticals: (1) the EverPro suite of solutions in Home Services; (2) the EverHealth suite of solutions within Health Services; and (3) the EverWell suite I-1 of solutions in Fitness & Wellness Services.
We go to market with suites of solutions that are aligned to our three core verticals: (1) the EverPro suite of solutions in Home Services; (2) the EverHealth suite of solutions within Health Services; and (3) the EverWell suite of solutions in Fitness & Wellness Services.
Our EverWell solutions are built specifically for fitness professionals, which include gyms, studios, health clubs, specialized instructors (e.g., educational dance, gymnastics and cheer) and personal trainers and for wellness professionals, which include salons, spas and massage therapists. We offer select solutions to customers in other services verticals, including education, non-profit, pet care and automotive repair, among many others.
Our EverWell solutions are built specifically for fitness professionals, which include gyms, studios, health clubs, specialized instructors (e.g., educational dance, gymnastics and cheer) and personal trainers and for wellness professionals, which include salons, spas and massage therapists. I-6 We offer select solutions to customers in other services verticals, including education, non-profit, pet care and automotive repair, among many others.
We are currently tracking over 12,000 businesses around the world, primarily across our core verticals, as potential acquisition opportunities. Our customers We define a customer as an individual or entity that utilized or was capable of utilizing an EverCommerce solution or service for which they paid any one or combination of recurring, re-occurring or transactional fees in a given period.
We are currently tracking over 13,000 businesses around the world, primarily across our core verticals, as potential acquisition opportunities. Our customers We define a customer as an individual or entity that utilized or was capable of utilizing an EverCommerce solution or service for which they paid any one or combination of recurring, re-occurring or transactional fees in a given period.
Migration of more than half of our technology solutions to AWS has allowed for gains in productivity, cost efficiency, expanded capacity and faster innovation. • Cyber security: Our Security Operations team uses industry best practices and functional expertise to perform regular risk assessments, audits and remediation across our IT infrastructure and the data we maintain therein.
Migration of more than half of our technology solutions to AWS has allowed for gains in productivity, cost efficiency, expanded capacity and faster innovation. • Cybersecurity: Our Security Operations team uses industry best practices and functional expertise to perform regular risk assessments, audits and remediation across our IT infrastructure and the data we maintain therein.
I-10 The principal competitive factors affecting our market include: • Breadth and depth of vertical solutions; • Quality of products and features; • Seamless integration and ease-of-use; • Customer support capabilities; • Pricing and costs; • Product strategy and pace of innovation; • Name recognition and brand reputation; • Sales and marketing execution; and • Platform security. See Part I.
The principal competitive factors affecting our market include: • Breadth and depth of vertical solutions; • Quality of products and features; • Seamless integration and ease-of-use; I-8 • Customer support capabilities; • Pricing and costs; • Product strategy and pace of innovation; • Name recognition and brand reputation; • Sales and marketing execution; and • Platform security. See Part I.
These value-add features help SMBs to ensure more timely billing and payments collection and provide improved cash flow visibility. • Customer Engagement Applications: Our Customer Engagement Applications modernize how businesses engage and interact with customers by leveraging innovative, bespoke customer listening and communication solutions to improve the customer experience and increase retention.
These value-add features help SMBs to ensure more timely billing and payments collection and provide improved cash flow visibility. • Customer Experience Solutions: Our Customer Experience Solutions modernize how businesses engage and interact with customers by leveraging innovative, bespoke customer listening and communication solutions to improve the customer experience and increase retention.
Collectively, in 2022 SMBs represented the single largest employer and employee category in the U.S. economy, accounting for 99.9% of businesses in the United States, 46% of the U.S. private workforce and over 40% of U.S. GDP. The services sector is the backbone of the U.S. economy, representing approximately 77% of U.S. GDP and 80% of U.S. employment.
Collectively, in 2023 SMBs represented the single largest employer and employee category in the U.S. economy, accounting for 99.9 % of businesses in the United States, 46 % of the U.S. private workforce and over 40% of U.S. GDP. The services sector is the backbone of the U.S. economy, representing approximately 77% of U.S. GDP and 80% of U.S. employment.
For example, the business management requirements of Home Services contractors are different than the business management requirements of small physician practices or boutique gyms. As a result we have built a comprehensive platform designed specifically to meet the unique end-to-end workflow needs of service SMBs.
For example, the business management requirements of Home Services contractors are different than the business management requirements of small physician practices or boutique gyms. As a result, we have built a comprehensive platform designed specifically to meet the unique integrated workflow needs of service SMBs.
We believe we had an addressable annualized revenue opportunity with our existing customers of greater than $5 billion as of December 31, 2022, as our integrated vertical SaaS solutions allow us to offer customers additional capabilities across their entire customer engagement lifecycle.
We believe we had an addressable annualized revenue opportunity with our existing customers of greater than $5 billion as of December 31, 2023, as our integrated vertical SaaS solutions allow us to offer customers additional capabilities across their entire customer engagement lifecycle.
Data privacy and security Regulators around the world have adopted or proposed requirements regarding the collection, use, transfer, security, storage, destruction and other processing of personal data. These laws are increasing in number and complexity, resulting in higher risk of enforcement, fines and other penalties.
Data privacy and security Regulators around the world have adopted or proposed laws, regulations, standards and requirements regarding the collection, use, transfer, security, storage, destruction and other processing of personal data. These laws are increasing in number and complexity, resulting in higher risk of enforcement, fines and other penalties.
We also enter into confidentiality agreements with our customers, partners and third parties who have access to our confidential information. I-13 While much of the intellectual property we use is owned by us, we have obtained rights to use intellectual property of third parties through licenses and service agreements with those third parties.
We also enter into confidentiality agreements with our customers, partners and third parties who have access to our confidential information. While much of the intellectual property we use is owned by us, we have obtained rights to use intellectual property of third parties through licenses and service agreements with those third parties.
For the year ended December 31, 2022, we estimate that approximately 90% of our customers contributed less than $2,000 in revenue and approximately 5% contributed more than $5,000 in revenue. Small- and medium-sized businesses (“SMBs”) are an important engine for economic growth.
For the year ended December 31, 2023, we estimate that approximately 90% of our customers contributed less than $2,000 in revenue and approximately 5% contributed more than $5,000 in revenue. Small- and medium-sized businesses (“SMBs”) are an important engine for economic growth.
Our scalable and flexible SaaS solutions alleviate resource needs associated with implementing and managing costly on-premise infrastructure, which simplifies the management of distributed workforces, enhances operational simplicity, and provides continuous delivery of updates and upgrades to our solutions. I-8 • Mobile capabilities.
Our scalable and flexible SaaS solutions alleviate resource needs associated with implementing and managing costly on-premise infrastructure, which simplifies the management of distributed workforces, enhances operational simplicity, and provides continuous delivery of updates and upgrades to our solutions. • Mobile capabilities.
Competition While we have built a scaled, differentiated platform, we compete in a variety of highly fragmented markets and face competition from a variety of sources: • Manual processes, basic PC tools, standalone payment terminals and homegrown solutions, utilized by many service SMBs; • Vertically-specialized competitors, including mobile sales applications and field service management platforms in Home Services, EHR/EMR and practice management platforms in Health Services and facility and employee management and member management and programming platforms in Fitness & Wellness Services; and • Horizontal competitors, including Salesforce for CRM, Intuit for financial products, Square for payments and HubSpot for marketing related solutions.
Competition While we have built a scaled, differentiated platform, we compete in a variety of highly fragmented markets and face competition from a variety of sources: • Manual processes, basic PC tools, standalone payment terminals and homegrown solutions, utilized by many service SMBs; • Vertically-specialized competitors, including mobile sales applications and field service management platforms in Home Services, EHR/EMR and practice management platforms in Health Services and facility and employee management and member management and programming platforms in Fitness & Wellness Services; and • Horizontal competitors, including Salesforce for customer relationship management (“CRM”), Intuit for financial products, Square for payments and HubSpot for marketing related solutions.
Our TAM also includes our payments opportunity, which we arrive at by estimating total revenue across our vertical segments and multiplying by both pricing and penetration estimates. We believe there are multiple sources of upside to our current TAM.
Our TAM also includes our payments opportunity, which we arrive at by estimating total revenue across our vertical segments and multiplying by both pricing and penetration estimates. I-3 We believe there are multiple sources of upside to our current TAM.
I-6 • EverHealth – Health Services: Our EverHealth solutions are purpose-built for health service professionals. The Health Services market is rooted in a group of core solutions, including practice management and electronic health record (“EHR”) / electronic medical record (“EMR”) software.
I-5 • EverHealth – Health Services: Our EverHealth solutions are purpose-built for health service professionals. The Health Services market is rooted in a group of core solutions, including practice management and electronic health record (“EHR”) / electronic medical record (“EMR”) software.
We are exclusively focused on providing service SMBs with tailored solutions to help meet their specific needs. Our vertical and micro-vertical approach enables us to provide tailored solutions featuring critical vertical-specific functionality that better serves our customers when compared to industry-agnostic solutions offered by other businesses. • Integrated solutions for end-to-end workflow.
We are exclusively focused on providing service SMBs with tailored solutions to help meet their specific needs. Our vertical and micro-vertical approach enables us to provide tailored solutions featuring critical vertical-specific functionality that better serves our customers when compared to industry-agnostic solutions offered by other businesses. • Integrated solutions.
These laws are enforced by federal, state and local regulatory agencies in the jurisdictions where we operate, and in some instances also through private civil litigation.
These laws are enforced by federal, state and local regulatory agencies in the jurisdictions where we operate, and in some I-10 instances also through private civil litigation.
Our platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly specialized demands, as well as highly complementary solutions that complete end-to-end offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.
Our platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly specialized demands, as well as highly complementary solutions that provide fully-integrated offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.
Our integrated solutions include Business Management Software (such as route-based dispatching, medical practice management and gym member management), Billing & Payment Solutions (such as e-invoicing, mobile payments and integrated payment processing), Customer Engagement Applications (such as reputation management and messaging solutions) and Marketing Technology Solutions (such as websites, hosting and digital lead generation).
Our integrated solutions include Business Management Software (such as route-based dispatching, medical practice management and gym member management), Billing & Payment Solutions (such as e-invoicing, mobile payments and integrated payment processing), Customer Experience Solutions (such as reputation management and messaging solutions) and Marketing Technology Solutions (such as websites, hosting and digital lead generation).
We believe there is considerable runway for long-term growth given the vast majority of our market opportunity is untapped; we estimate that only 9% of the North America service SMB market has been penetrated with full end-to-end software solutions today, and estimate this number to increase to over 13% by 2025.
We believe there is considerable runway for long-term growth given the vast majority of our market opportunity is untapped; we estimate that only 9% of the North America service SMB market has been penetrated with fully-integrated software solutions today, and estimate this number to increase to over 13% by 2025.
We intend to drive significant growth by executing the following key strategies: • Attract new customers: We believe that there is a significant opportunity to attract new customers with our current offerings and within the market segments in which we currently operate. We estimate that there are over 31 million service SMBs in North America alone, and 400 million globally.
We intend to drive significant growth by executing the following key strategies: • Attract new customers: We believe that there is a significant opportunity to attract new customers with our current offerings and within the market segments in which we currently operate. We estimate that there are over 35 million service SMBs in North America alone, and 456 million globally.
These solutions lack the necessary integration of business data and operational workflows that service SMBs need to execute end-to-end processes. Moreover, they limit visibility into business performance and businesses’ ability to optimize data gathered across various processes. I-3 • Built on inflexible, legacy technology infrastructure. Existing solutions are often built on legacy, on-premise infrastructure.
These solutions lack the necessary integration of business data and operational workflows that service SMBs need to execute integrated processes. Moreover, they limit visibility into business performance and businesses’ ability to optimize data gathered across various processes. • Built on inflexible, legacy technology infrastructure. Existing solutions are often built on legacy, on-premise infrastructure.
I-4 Our solutions We offer several vertically-tailored suites of solutions, each of which follows a similar and repeatable go-to-market playbook: offer a “system of action” Business Management Software that streamlines daily business workflows, integrate highly complementary, value-add adjacent solutions and complete gaps in the value chain to create end-to-end solutions.
Our solutions We offer several vertically-tailored suites of solutions, each of which follows a similar and repeatable go-to-market playbook: offer a “system of action” Business Management Software that streamlines daily business workflows, integrate highly complementary, value-add adjacent solutions and complete gaps in the value chain to create integrated solutions.
We further estimate that, based on our current customers and payment volumes, we have an aggregate annualized payment processing opportunity of approximately $90 billion. Our payments platform also provides a full suite of service commerce features, including customer management as well as cash flow reporting and analytics.
We further estimate that, based on our current customers and payment volumes, we have an aggregate annualized payment processing opportunity of approximately $96 billion. Our payments platform also provides a full suite of service commerce I-4 features, including customer management as well as cash flow reporting and analytics.
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business and Financial Metrics—Non-GAAP Financial Measures.” Key trends impacting our industry Service SMBs are still in the early innings of transforming their businesses for the digital age. We estimate that only 9% of the service SMB market has been penetrated with full end-to-end software solutions.
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business and Financial Metrics—Non-GAAP Financial Measures.” Key trends impacting our industry Service SMBs are still in the early innings of transforming their businesses for the digital age. We estimate that only 9% of the service SMB market has been penetrated with fully-integrated software solutions.
Five years ago, we estimated that less than 50% of SMBs in the United States had adopted digital payment processing solutions, and instead relied on paper invoices for payment. This has expanded to nearly 70% in the last couple of years, a trend that we expect to continue in the future.
Six years ago, we estimated that less than 50% of SMBs in the United States had adopted digital payment processing solutions, and instead relied on paper invoices for payment. This has expanded to nearly 80% in the last couple of years, a trend that we expect to continue in the future.
These tools help our customers gain actionable insights, increase customer loyalty and repeat purchases and improve customer experiences. I-5 • Marketing Technology Solutions: Our Marketing Technology Solutions work alongside our Customer Engagement Applications to help customers holistically grow their businesses through new business generation and improved engagement and marketing throughout the customer lifecycle.
These tools help our customers gain actionable insights, increase customer loyalty and repeat purchases and improve customer experiences. • Marketing Technology Solutions: Our Marketing Technology Solutions work alongside our Customer Experience Solutions to help customers holistically grow their businesses through new business generation and improved engagement and marketing throughout the customer lifecycle.
The insight we gain into our more than 685,000 customers’ use of our offerings informs our product pipeline, allowing us to constantly refine existing solutions and deliver new solutions that are most valuable to them. Our growth strategies We are focused on growing and scaling our business in a rapid, yet sustainable and disciplined fashion.
The insight we gain into our approximately 708,000 customers’ use of our offerings informs our product pipeline, allowing us to constantly refine existing solutions and deliver new solutions that are most valuable to them. Our growth strategies We are focused on growing and scaling our business in a rapid, yet sustainable and disciplined fashion.
Supported payment types include credit card, debit card and Automated Clearing House (“ACH”) processing. Based on the monthly average processing volume for the quarter ended December 31, 2022, we estimate that we process annualized total volume of $10.9 billion.
Supported payment types include credit card, debit card and Automated Clearing House (“ACH”) processing. Based on the monthly average processing volume for the quarter ended December 31, 2023, we estimate that we process annualized total volume of $11.9 billion.
Our Verticals Micro-vertical Examples Home Services HVAC/plumbing, electrical professionals, remodeling and home improvement contractors, window and door replacement specialties, security and alarm installation and monitoring businesses Health Services Specialty private medical practices, mental health therapists, chronic care specialists, ambulatory and EMT services, specialty branches of hospital systems Fitness & Wellness Services Chain and franchise gyms, full-service health clubs, boutique studios, personal trainers, dance and instructional schools, salons and spas, massage therapists Other Non-profits, veterinary care facilities, small accounting and tax firms, educational facilities, social services, pet/veterinary care, professional services, consumer services As of December 31, 2022, we served more than 685,000 customers.
Our Verticals Vertical Brands Micro-vertical Examples Home Services EverPro HVAC/plumbing, electrical professionals, remodeling and home improvement contractors, window and door replacement specialties, security and alarm installation and monitoring businesses Health Services EverHealth Specialty private medical practices, mental health therapists, chronic care specialists, ambulatory and EMT services, specialty branches of hospital systems Fitness & Wellness Services EverWell Chain and franchise gyms, full-service health clubs, boutique studios, personal trainers, dance and instructional schools, salons and spas, massage therapists Other Non-profits, veterinary care facilities, small accounting and tax firms, educational facilities, social services, pet/veterinary care, professional services, consumer services As of December 31, 2023, we served approximately 708,000 customers.
Our platform spans across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications. Today, we serve more than 685,000 customers across three core verticals: Home Services; Health Services; and Fitness & Wellness Services.
Our platform spans across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications. Today, we serve approximately 708,000 customers across three core verticals: Home Services; Health Services; and Fitness & Wellness Services.
In addition, our consumer transactions business is now, or may in the future be, subject to certain financial services laws, regulations and rules, such as the Payment Card Industry Data Security Standards, the Gramm-Leach-Bliley Act and the National Automated Clearing House Association ACH Rules, and our healthcare services businesses are subject to certain healthcare security and privacy laws, such as HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated thereunder (collectively, “HIPAA”) in the United States and Personal Information Protection and Electronic Documents Act and Personal Health Information Protection Act (“PIPEDA”) in Canada.
Our consumer transactions business is now, or may in the future be, subject to certain financial services laws, regulations and rules, such as the Payment Card Industry Data Security Standards, the Gramm-Leach-Bliley Act and the National Automated Clearing House Association ACH Rules, and our healthcare services businesses are subject to certain healthcare security and privacy laws, such as the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations promulgated thereunder (collectively, “HIPAA”) in the United States.
As of December 31, 2022, we had 155 registered trademarks in the United States (including EverCommerce), three registered trademarks in the EU (for the EverCommerce logo), two registered trademarks in Puerto Rico, one registered trademark in Canada, 15 registered trademarks in New Zealand, six registered trademarks in Australia and seven registered trademarks in the United Kingdom; six trademark applications in process in the United States and six trademark applications in process in Canada; 35 registered copyrights in the United States and one registered copyright in Canada; and six issued patents in the United States and four pending patents in the United States.
As of December 31, 2023, we had 149 registered trademarks in the United States (including EverCommerce), three registered trademarks in the EU (for the EverCommerce logo), two registered trademarks in Puerto Rico, one registered trademark in Canada, 15 registered trademarks in New Zealand, six registered trademarks in Australia and seven registered trademarks in the United Kingdom; six trademark applications in process in the United States and six trademark applications in process in Canada; 37 registered copyrights in the United States and one registered copyright in Canada; and seven issued patents in the United States.
Integrated payments (e.g., digital payment acceptance that is embedded into the software that companies use to manage their businesses) have driven operating efficiencies for businesses and have improved payment security and tracking as compared to traditional paper methods. • Increasingly vertical- and micro vertical-specific software needs.
Integrated payments (e.g., digital payment acceptance that is embedded into the software that companies use to manage their businesses) have driven operating efficiencies for businesses and have improved payment security and tracking as compared to traditional paper methods. • Mobile enablement.
We estimate the total addressable market (“TAM”) for our current solutions was approximately $1.3 trillion globally in 2020, of which approximately $520 billion was in North America, which refers to the United States and Canada.
We estimate the total addressable market (“TAM”) for our current solutions was approximately $1.6 trillion globally in 2023, of which approximately $662 billion was in North America, which refers to the United States and Canada.
I-7 • EverWell – Fitness & Wellness: Our EverWell solutions are purpose-built for Fitness & Wellness service professionals. The Fitness & Wellness market includes tech-savvy businesses which generally require integrated solutions that provide modern, convenient experiences for end consumers. Member management and consumer-facing scheduling and facility access solutions are “must-have” software capabilities for modern gyms, spas and salons.
The Fitness & Wellness market includes tech-savvy businesses which generally require integrated solutions that provide modern, convenient experiences for end consumers. Member management and consumer-facing scheduling and facility access solutions are “must-have” software capabilities for modern gyms, spas and salons.
Item 1A. “Risk Factors” for a more comprehensive description of risks related to competition. Our product strategy Our product strategy organization develops an in-depth understanding of the customer and their varied workflow needs across our target industries, in order to pursue holistic “buy” vs “build” strategies to deliver an integrated value chain to our customers.
Item 1A. “Risk Factors” for a more comprehensive description of risks related to competition. Our product strategy Our product strategy and management organization develops an in-depth understanding of the customer and their varied workflow needs across our target industries and focuses on strategies to deliver an integrated value chain to our customers.
We estimate the total number of service SMBs, which represent service-based businesses with 500 or fewer employees, was approximately 400 million globally in 2020, of which 31 million were in North America.
We estimate the total number of service SMBs, which represent service-based businesses with 500 or fewer employees, was approximately 456 million globally in 2023, of which 35 million were in North America.
These acquired solutions bring deep industry expertise and vertically-tailored software I-9 solutions that provide additional sources of growth. We believe that our methodology, track record and reputation for sourcing, evaluating and integrating acquisitions positions us as an “acquirer-of-choice” for potential targets. We have acquired 52 companies since our inception, including five in 2021 and nine in 2020.
These acquired solutions bring deep industry expertise and vertically-tailored software solutions that provide additional sources of growth. We believe that our methodology, track record and reputation for sourcing, evaluating and integrating acquisitions positions us as an “acquirer-of-choice” for potential targets. We have acquired 53 companies since our inception.
Our net loss was $59.8 million for the year ended December 31, 2022, compared to a net loss of $82.0 million for the year ended December 31, 2021. Our Adjusted EBITDA reached $119.0 million for the year ended December 31, 2022, up from $107.2 million for the year ended December 31, 2021.
Our net loss was $45.6 million for the year ended December 31, 2023, compared to a net loss of $59.8 million for the year ended December 31, 2022. Our Adjusted EBITDA reached $155.6 million for the year ended December 31, 2023, up from $119.0 million for the year ended December 31, 2022.
Together, these trends are contributing to the accelerating adoption of digital technologies. • Mobile enablement. Due in large part to consumer demand and purchasing habits, a substantial amount of commerce is now conducted via a mobile device, whether through a standalone mobile application or as an integrated, companion application to a broader web-based software.
Due in large part to consumer demand and purchasing habits, a substantial amount of commerce is now conducted via a mobile device, whether through a standalone mobile application or as an integrated, companion application to a broader web-based software.
Our end-to-end suites integrate solutions across the full range of our customers’ workflows (including internal and back-office functions and customer-facing services), simplifying their operations and providing a frictionless experience when compared to disjointed point solutions offered by other software businesses. • SaaS-based solutions.
Our business management software integrates solutions across the full range of our customers’ workflows (including internal and back-office functions and customer-facing services such as integrated payments and billing and invoicing automation), simplifying their operations and providing a frictionless experience when compared to disjointed point solutions offered by other software businesses. • SaaS-based solutions.
We believe in and prioritize diversity, equality and inclusivity in our workplace and behave in a manner where these I-11 values are the underpinnings of how we build programs, in the selection and promotion of individuals and how we support the growth and development of our people.
We plan to continue to make investment in our human capital a priority. We believe in and prioritize diversity, equality and inclusivity (“DEI”) in our workplace and behave in a manner where these values are the underpinnings of how we build programs, in the selection and promotion of individuals and how we support the growth and development of our people.
SMBs across verticals are specializing in order to better compete and align with end-customer preferences, which has resulted in a greater need for vertically-tailored software solutions to address micro-vertical specific workflows.
Together, these trends are contributing to the accelerating adoption of digital technologies. • Increasingly vertical- and micro vertical-specific software needs. SMBs across verticals are specializing in order to better compete and align with end-customer preferences, which has resulted in a greater need for vertically-tailored software solutions to address micro-vertical specific workflows.
Limitations of existing approaches Historically, service SMBs have not heavily relied on technology to manage key workflows, but they are increasingly turning to software solutions to streamline operations and boost efficiency.
According to Cisco, cloud solutions are one of the top three areas for near-term technology investment for small businesses. Limitations of existing approaches Historically, service SMBs have not heavily relied on technology to manage key workflows, but they are increasingly turning to software solutions to streamline operations and boost efficiency.
With the confluence of changing consumer preferences towards digital and a younger, more tech-savvy generation of business owners taking seat, businesses are increasingly looking to upgrade and streamline how they engage with their customers. I-2 • Digital marketing.
With the confluence of changing consumer preferences towards digital and a younger, more tech-savvy generation of business owners taking seat, businesses are increasingly looking to upgrade and streamline how they engage with their customers. • Digital marketing. Digital channels are allowing businesses to reach their existing and potential end consumers in more innovative, effective and efficient ways than ever before.
This results in a self-reinforcing flywheel, enabling us to drive more value for our customers and, in turn, fuel our growth by increasing Average Revenue per Unit (“ARPU”), improving customer stickiness and increasing our market share. While we offer multiple products and address several verticals and micro-verticals, we manage our business with a singular, centralized approach to strategy and operations.
This results in a self-reinforcing flywheel, enabling us to drive more value for our customers and, in turn, fuel our growth by increasing Average Revenue per Unit (“ARPU”), improving customer stickiness and increasing our market share.
Through acquisitions and organic growth of our business, the number of customers on our platform increased from approximately 110,000 at the end of 2018 to more than 685,000 at the end of 2022. • Expand into new products and verticals: Given our position in the service SMB ecosystem, as well as our relationships and level of entrenchment with our customers, we use insights gained through our customer lifecycle to identify additional solutions that are value-additive for our customers.
I-7 • Expand into new products and verticals: Given our position in the service SMB ecosystem, as well as our relationships and level of entrenchment with our customers, we use insights gained through our customer lifecycle to identify additional solutions that are value-additive for our customers.
Our revenue has grown at a compound annual growth rate (“CAGR”) of 36.9% from 2019 to 2022, and reached $620.7 million for the year ended December 31, 2022, up from $490.1 million for the year ended December 31, 2021, which represents revenue growth of 26.6% from 2021 to 2022.
Our financial results have reflected our rapid growth. Our revenue has grown at a compound annual growth rate (“CAGR”) of 26.0% from 2020 to 2023, and reached $675.4 million for the year ended December 31, 2023, up from $620.7 million for the year ended December 31, 2022, which represents revenue growth of 8.8% from 2022 to 2023.
Of the $520 billion, we estimate a $59 billion opportunity in Home Services, a $84 billion opportunity in Health Services, a $21 billion opportunity in Fitness & Wellness Services and a $356 billion opportunity in other services categories.
Of the $662 billion, we estimate a $69 billion opportunity in Home Services, a $115 billion opportunity in Health Services, a $26 billion opportunity in Fitness & Wellness Services and a $452 billion opportunity in other services categories.
These insights allow us to continually assess opportunities to develop or acquire solutions to further expand market share, drive customer stickiness and fuel growth for our business. • Expand ARPU and grow wallet share: Today, we serve more than 685,000 service SMBs, which represent a significant opportunity for growth.
These insights allow us to continually assess opportunities to develop or acquire solutions to further expand market share, drive customer stickiness and fuel growth for our business.
We centralize key functions including marketing, business operations, cybersecurity and general and administrative functions, ensuring consistency in execution across each of our verticals, and ultimately stimulating a culture of operational excellence. Our financial results have reflected our rapid growth.
I-1 While we offer multiple products and address several verticals and micro-verticals, we manage our business with a singular, centralized approach to strategy and operations. We centralize key functions including marketing, business operations, cybersecurity and general and administrative functions, ensuring consistency in execution across each of our verticals, and ultimately stimulating a culture of operational excellence.
We place a high level of emphasis on the relationships we have with our people, their engagement and commitment to the organization. Our fundamental belief is that when a company has a strong relationship with its employees, they in turn deliver exceptional customer service and in turn that delivers strong business performance.
Our fundamental belief is that when a company has a strong relationship with its employees, they in turn deliver exceptional customer service and in turn that delivers strong business performance. We have seen and believe our diverse, inclusive and innovative workforce is and will continue to be a competitive advantage.
Our privacy and legal teams are committed to I-12 processing and fulfilling any requests regarding the exercise of an individual’s privacy rights with respect to personal information.
Our privacy and legal teams are committed to processing and fulfilling any requests regarding the exercise of an individual’s privacy rights with respect to personal information. In the United States, numerous federal and state laws and regulations, including data breach notification laws and consumer protection laws govern the collection, use, disclosure, and protection of personal information.
In addition to providing continuous learning, autonomy and engaging work, we provide a series of competitive benefits, including health insurance for employees and dependents, a 401k match, paid parental leave and flexible time off. We allot over 15,000 hours per year for our employees to volunteer for causes that are important to them.
Our values reflect who EverCommerce is and serve as our guiding force on how we plan to achieve our organizational objectives. In addition to providing continuous learning, autonomy and engaging work, we provide a series of competitive benefits, including health insurance for employees and dependents, a 401k match, paid parental leave and flexible time off.
Our technology Our SaaS solutions are strategically integrated to best serve our service SMB customers and ensure they have all the tools to help them grow and scale. We leverage a common set of best practices, IT infrastructure and architectures that serve as a foundation for highly scalable and secure software solutions.
We leverage a common set of best practices, IT infrastructure and architectures that serve as a foundation for highly scalable and secure software solutions.
Our software provides customer listening capabilities with real-time customer surveying and analysis to allow standalone businesses and multi-location brands to receive VoC insights and manage the customer experience lifecycle. These applications include: customer health scoring, customer support systems, real-time alerts, NPS-based customer feedback collection, review generation and automation, reputation management, customer satisfaction surveying and a digital communication suite, among others.
These applications include: customer health scoring, customer support systems, real-time alerts, Net Promoter Score (“NPS”)-based customer feedback collection, review generation and automation, reputation management, customer satisfaction surveying and a digital communication suite, among others.
Within the tight-knit culture we have built and sustained, we celebrate our people and their successes with company events, team building activities and other important benefits. We invest in continuous growth and development with training and education and we provide career opportunities for people to continue to stretch their strengths and capabilities.
We allot over 15,000 hours per year for our employees to volunteer for causes that are important to them. Within the tight-knit culture we have built and sustained, we celebrate our people and their successes with company events, team building activities and other important benefits.
For example, software for instructional dance and martial arts centers has emerged within the Fitness & Wellness industry in recent years to better service the specialized educational training needs of these end-customers. • Decreasing barriers to software adoption. Given their size and resource capabilities, SMBs generally require lower priced and easier-to-implement technology solutions than larger-scale enterprise businesses.
For example, software for instructional dance and martial arts centers has emerged within the Fitness & Wellness industry in recent years to better service the specialized educational training needs of these end-customers. • Digital payments. Digital payment processing solution adoption continues to expand within our core SMB customer base.
We believe that our patient and provider engagement solutions position us well to benefit from major industry trends such as the digitalization of front-office operations and patient engagement. As with EverPro, we believe we are well positioned to continue to take market-share in current- and future-focus specialty micro-verticals, such as urology, audiology, chronic care management, otolaryngology and nephrology.
We believe that our patient and provider engagement solutions position us well to benefit from major industry trends such as the digitalization of front-office operations and patient engagement. • EverWell – Fitness & Wellness: Our EverWell solutions are purpose-built for Fitness & Wellness service professionals.
As a result of the innovations in cloud technology and the proliferation of SaaS, today’s solutions are more affordable and easier for SMBs to implement than ever before. According to Cisco, cloud solutions are one of the top three areas for near-term technology investment for small businesses. • COVID-19 pandemic accelerated pre-existing trends.
Given their size and resource capabilities, SMBs generally require lower priced and easier-to-implement technology solutions than larger-scale enterprise businesses. As a result of the innovations in cloud I-2 technology and the proliferation of SaaS, today’s solutions are more affordable and easier for SMBs to implement than ever before.
These trends continue to give rise to evolving and new digital marketing solutions aimed at helping businesses target end consumers, lower acquisition costs and increase lifetime value. • Digital payments. Digital payment processing solution adoption continues to expand within our core SMB customer base.
We expect both increasing adoption of digital marketing tools, compounded by expected increased spend on such tools, recognizing the power and importance of these digital channels. These trends continue to give rise to evolving and new digital marketing solutions aimed at helping businesses target end consumers, lower acquisition costs and increase lifetime value. • Decreasing barriers to software adoption.
None of our employees are represented by labor unions or covered by collective bargaining agreements. As of December 31, 2022, we had approximately 2,300 employees operating across six countries, including approximately 1,800 employees located in the United States.
I-9 As of December 31, 2023, we had approximately 2,100 employees operating across six countries, including approximately 1,600 employees located in the United States. Our technology Our SaaS solutions are strategically integrated to best serve our service SMB customers and ensure they have all the tools to help them grow and scale.
Removed
Digital channels are allowing businesses to reach their existing and potential end consumers in more innovative, effective and efficient ways than ever before. We expect both increasing adoption of digital marketing tools, compounded by expected increased spend on such tools, recognizing the power and importance of these digital channels.
Added
Our software provides customer listening capabilities with real-time customer surveying and analysis to allow standalone businesses and multi-location brands to receive Voice of Customer (“VoC”) insights and manage the customer experience lifecycle.
Removed
We believe the COVID-19 pandemic accelerated demand for digital solutions, especially in areas like customer engagement, resulting in SMBs increasing investment in technology to modernize and drive growth and operational efficiencies.
Added
Through acquisitions and organic growth of our business, the number of customers on our platform increased from approximately 110,000 at the end of 2018 to approximately 708,000 at the end of 2023. • Expand ARPU and margin: Today, we serve approximately 708,000 customers, which represent a significant opportunity for growth.
Removed
According to Forrester, it saw significant gains in its Customer Experience Index in 2020 due to accelerated implementation and leverage of Voice of Customer (“VoC”) measurement tools like Net Promoter Score (“NPS”). We believe the effects of COVID-19 on businesses have advanced the shift to modern, cloud-based software solutions.
Added
A primary focus for ARPU expansion focuses on cross-selling payments solutions to customers in an effort to prioritize margin growth.
Removed
Of these customers, approximately 66% were based in the United States and approximately 34% were international. Despite not having merger and acquisition driven customer additions in 2022, we grew our total customer base organically by approximately 14% for the year.
Added
Of these customers, approximately 67% were based in the United States and approximately 33% were international.
Removed
As an example of this approach, we acquired and onboarded Joist in our EverPro solutions group in December 2018. Joist is a mobile app used by small contractors to provide estimates, invoices and collect payment for a project. At the time of acquisition, Joist went to market with a freemium model in the very early stages of monetization.
Added
Our people, culture and values We consider our people and culture to be vital to our success. We place a high level of emphasis on the relationships we have with our people, their engagement and commitment to the organization.
Removed
Shortly after onboarding Joist, we began executing several different growth and profitability initiatives, including: (i) product enhancements to transition from its freemium model to a tiered subscription model; (ii) leveraging our centralized digital marketing capabilities, we accelerated customer acquisition and added more than 40,000 SaaS customers in 18 months; and (iii) modifying payments integration to increase unit profitability by leveraging the scale of our payments platform.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe rules of the card networks are set by their boards, which may be influenced by card issuers, some of which offer competing transaction processing services. If we fail to comply with the applicable rules and requirements of the payment card networks or payment processors, they could suspend or terminate our registration.
Biggest changeIf we fail to comply with the applicable rules and requirements of the payment card networks, bank sponsors or payment processors, they could suspend or terminate our registration (with the payment networks) and/or terminate our ISO and/or payment facilitator agreements, which would make it impossible for us to conduct our business on its current scale.
If third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, our the annual total addressable market for our solutions and services may be smaller than we have estimated, our future growth opportunities and sales growth may be impaired, any of which could have a material adverse effect on our business, financial condition and results of operations.
If third-party or internally generated data prove to be inaccurate or we make errors in our assumptions based on that data, the annual total addressable market for our solutions and services may be smaller than we have estimated, our future growth opportunities and sales growth may be impaired, any of which could have a material adverse effect on our business, financial condition and results of operations.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject I-46 matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial conditions and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; I-41 • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our common stock, including sales by certain affiliates of Providence Strategic Growth, Silver Lake or our executive officers and directors; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States; • other events or factors, including those resulting from war (including the ongoing war in Ukraine), pandemics (including COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this “Risk Factors” section of this Annual Report on Form 10-K.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial conditions and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our common stock, including sales by certain affiliates of Providence Strategic Growth, Silver Lake or our executive officers and directors; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States; • other events or factors, including those resulting from war (including the ongoing war in Ukraine), pandemics (including COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this “Risk Factors” section of this Annual Report on Form 10-K.
Although we expect to continue to acquire companies and other assets in the future, such acquisitions pose a number of challenges and risks, including the following: • the ability to identify suitable acquisition candidates or acquire additional assets at attractive valuations and on favorable terms; • the availability of suitable acquisition candidates; • the ability to compete successfully for identified acquisition candidates, complete acquisitions or accurately estimate the financial effect of acquisitions on our business; • higher than expected or unanticipated acquisition costs; • effective integration and management of acquired businesses in a manner that permits the combined company to achieve the full revenue and cost synergies and other benefits anticipated to result from the acquisition, due to difficulties such as incompatible accounting, information management or other control systems; I-16 • retention of an acquired company’s key employees or customers; • contingent or undisclosed liabilities, incompatibilities and/or other obstacles to successful integration not discovered during the pre-acquisition due diligence process; • the availability of management resources to evaluate acquisition candidates and oversee the integration and operation of the acquired businesses; • the ability to obtain the necessary debt or equity financing, on favorable terms or at all, to finance any of our potential acquisitions; • increased interest expense, restructuring charges and amortization expenses related to intangible assets; • significant dilution to our stockholders for acquisitions made utilizing our securities; and • the ability to generate cash necessary to execute our acquisition strategy and/or the reduction of cash that would otherwise be available to fund operations or for other purposes.
Although we expect to continue to acquire companies and other assets in the future, such acquisitions pose a number of challenges and risks, including the following: I-23 • the ability to identify suitable acquisition candidates or acquire additional assets at attractive valuations and on favorable terms; • the availability of suitable acquisition candidates; • the ability to compete successfully for identified acquisition candidates, complete acquisitions or accurately estimate the financial effect of acquisitions on our business; • higher than expected or unanticipated acquisition costs; • effective integration and management of acquired businesses in a manner that permits the combined company to achieve the full revenue and cost synergies and other benefits anticipated to result from the acquisition, due to difficulties such as incompatible accounting, information management or other control systems; • retention of an acquired company’s key employees or customers; • contingent or undisclosed liabilities, incompatibilities and/or other obstacles to successful integration not discovered during the pre-acquisition due diligence process; • the availability of management resources to evaluate acquisition candidates and oversee the integration and operation of the acquired businesses; • the ability to obtain the necessary debt or equity financing, on favorable terms or at all, to finance any of our potential acquisitions; • increased interest expense, restructuring charges and amortization expenses related to intangible assets; • significant dilution to our stockholders for acquisitions made utilizing our securities; and • the ability to generate cash necessary to execute our acquisition strategy and/or the reduction of cash that would otherwise be available to fund operations or for other purposes.
Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • amendments to certain provisions of our amended and restated certificate of incorporation or amendments to our amended and restated bylaws generally require the approval of at least 66 2/3% of the voting power of our outstanding capital stock; • our staggered board; • at any time when the parties to our sponsor stockholders agreement beneficially own, in the aggregate, at least a majority of the voting power of our outstanding capital stock, our stockholders may take action by consent without a meeting, and at any time when the parties to our sponsor stockholders agreement beneficially own, in the aggregate, less than the majority of the voting power of our outstanding capital stock, our stockholders may not take action by written consent, but may only take action at a meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders, subject to the rights granted pursuant to the stockholders agreements; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer or a majority of our board of directors; • unless we otherwise consent in writing, restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our board of directors has the authority to issue shares of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders (other than the parties to our stockholders agreements for nominations made pursuant to the terms of the stockholders agreements) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • amendments to certain provisions of our amended and restated certificate of incorporation or amendments to our amended and restated bylaws generally require the approval of at least 66 2/3% of the voting power of our outstanding capital stock; • our staggered board; • at any time when the parties to our sponsor stockholders agreement beneficially own, in the aggregate, at least a majority of the voting power of our outstanding capital stock, our stockholders may take action by consent without a meeting, and at any time when the parties to our sponsor stockholders agreement beneficially own, in the aggregate, less than the majority of the voting power of our outstanding capital stock, our stockholders may not take action by written consent, but may only take action at a meeting of stockholders; • our amended and restated certificate of incorporation does not provide for cumulative voting; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders, subject to the rights granted pursuant to the stockholders agreements; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer or a majority of our board of directors; • unless we otherwise consent in writing, restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our board of directors has the authority to issue shares of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and I-37 • advance notice procedures apply for stockholders (other than the parties to our stockholders agreements for nominations made pursuant to the terms of the stockholders agreements) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
In the future, if regulators disagree with our position with respect to GLBA or other potentially applicable laws, including those related to money transmission, or if new guidance or interpretations thereof are issued, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain licenses or regulatory approvals, including state money transmitter licenses.
In the future, if regulators disagree with our position with respect to money transmission or other potentially applicable laws, including those related to money transmission, or if new guidance or interpretations thereof are issued, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain licenses or regulatory approvals, including state money transmitter licenses.
These risks and challenges include our ability to: • attract new and digitally-inclined service SMBs to the EverCommerce platform; • retain existing customers and leverage cross-sell and upsell opportunities; • successfully update the EverCommerce platform, including expanding into new verticals and international markets and integrating additional solution capabilities to further benefit our service SMB customers and enhance the end-customer experience; • expand through future acquisitions and successfully identify and integrate acquired entities, services and technologies; • hire, integrate and retain talented people at all levels of our organization; • comply with existing and new laws and regulations applicable to our business and in the industries in which we participate; • anticipate and respond to macroeconomic changes, changes within the existing and future industries in which we participate, including the Home Services, Health Services and Fitness & Wellness industries, and changes in the markets in which we operate; • foresee and manage market volatility impacts on market value; I-14 • react to challenges from existing and new competitors; • improve and enhance the value of our reputation and brand; • effectively manage our growth; and • maintain and improve the infrastructure underlying the EverCommerce platform, including our software, websites, mobile applications and data centers, as well as our cybersecurity and data protection measures.
These risks and challenges include our ability to: • attract new and digitally-inclined service SMBs to the EverCommerce platform; I-11 • retain existing customers and leverage cross-sell and upsell opportunities; • successfully update the EverCommerce platform, including expanding into new verticals and international markets and integrating additional solution capabilities to further benefit our service SMB customers and enhance the end-customer experience; • expand through future acquisitions and successfully identify and integrate acquired entities, services and technologies; • hire, integrate and retain talented people at all levels of our organization; • comply with existing and new laws and regulations applicable to our business and in the industries in which we participate; • anticipate and respond to macroeconomic changes, changes within the existing and future industries in which we participate, including the Home Services, Health Services and Fitness & Wellness industries, and changes in the markets in which we operate; • foresee and manage market volatility impacts on market value; • react to challenges from existing and new competitors; • improve and enhance the value of our reputation and brand; • effectively manage our growth; and • maintain and improve the infrastructure underlying the EverCommerce platform, including our software, websites, mobile applications and data centers, as well as our cybersecurity and data protection measures.
Our systems and operations or those of our third-party technology vendors could be exposed to damage or interruption from, among other things, fire, extreme weather events (including floods, storms, droughts and extreme temperatures) and other natural disasters, power loss, telecommunications failure, unauthorized entry, computer viruses, denial-of-service attacks, acts of terrorism, human error, vandalism or sabotage, financial insolvency and similar events.
Our information technology systems and operations or those of our third-party technology vendors could be exposed to damage or interruption from, among other things, fire, extreme weather events (including floods, storms, droughts and extreme temperatures) and other natural disasters, power loss, telecommunications failure, unauthorized entry, computer viruses, denial-of-service attacks, acts of terrorism, human error, vandalism or sabotage, financial insolvency and similar events.
I-45 In addition, we have opted out of Section 203 of the Delaware General Corporation Law, but our amended and restated certificate of incorporation provides that engaging in any of a broad range of business combinations with any “interested stockholder” (generally defined as any person who, together with that person’s affiliates and associates, owns, 15% or more of our outstanding voting stock) for a period of three years following the date on which the stockholder became an “interested stockholder” is prohibited, provided, however, that, under our amended and restated certificate of incorporation, the parties to our sponsor stockholders agreement and their respective affiliates will not be deemed to be interested stockholders regardless of the percentage of our outstanding voting stock owned by them, and accordingly will not be subject to such restrictions.
In addition, we have opted out of Section 203 of the Delaware General Corporation Law, but our amended and restated certificate of incorporation provides that engaging in any of a broad range of business combinations with any “interested stockholder” (generally defined as any person who, together with that person’s affiliates and associates, owns, 15% or more of our outstanding voting stock) for a period of three years following the date on which the stockholder became an “interested stockholder” is prohibited, provided, however, that, under our amended and restated certificate of incorporation, the parties to our sponsor stockholders agreement and their respective affiliates will not be deemed to be interested stockholders regardless of the percentage of our outstanding voting stock owned by them, and accordingly will not be subject to such restrictions.
Our systems and our third-party providers’ systems, including Worldpay, PayPal and other payment processing partners, may fail, or our third-party providers may discontinue providing their services or technology generally or to us specifically, which in either case could interrupt our business, cause us to lose business and increase our costs.
Our information technology systems and our third-party providers’ information technology systems, including Worldpay, PayPal and other payment processing partners, may fail, or our third-party providers may discontinue providing their services or technology generally or to us specifically, which in either case could interrupt our business, cause us to lose business and increase our costs.
In addition, we may be unable to achieve satisfactory prices for our offerings or maintain prices at competitive levels across our offering of solutions and services. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with a commensurate increase in our prices, our margins could decline.
In addition, we may be unable to achieve satisfactory prices for our offerings or maintain prices at competitive levels across our offering of solutions and services. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such an increase with a commensurate increase in our prices, our margins could decline.
The termination by our service or technology providers of their arrangements with us or their failure to perform their services efficiently and effectively may adversely affect our relationships with our clients and, if we cannot find alternate providers quickly, may cause those clients to terminate their processing agreements with us.
The termination by our service or technology providers of their agreements with us or their failure to perform their services efficiently and effectively may adversely affect our relationships with our clients and, if we cannot find alternate providers quickly, may cause those clients to terminate their processing agreements with us.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares.
If we raise additional funds through further issuances of equity or convertible securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares.
If our software solutions are not compliant with these evolving standards, our relationships with current customers, market position and sales could be impaired and we may have to invest significantly in changes to our software solutions. New Information Blocking and Interoperability Rules .
If our software solutions are not compliant with these evolving standards, our relationships with current customers, market position and sales could be impaired and we may have to invest significantly in changes to our software solutions. Information Blocking and Interoperability Rules .
Although we generally require that our agreements with our distribution partners and service providers who have access to client and customer data include confidentiality obligations that restrict these parties from using or disclosing any client or customer data except as necessary to perform their services under the applicable agreements, there can be no assurance that these contractual measures will prevent the unauthorized disclosure of business or client data, nor can we be sure that such third parties would be willing or able to satisfy liabilities arising from their I-23 breach of these agreements.
Although we generally require that our agreements with our distribution partners and service providers who have access to client and customer data include confidentiality obligations that restrict these parties from using or disclosing any client or customer data except as necessary to perform their services under the applicable agreements, there can be no assurance that these contractual measures will prevent the unauthorized disclosure of business or client data, nor can we be sure that such third parties would be willing or able to satisfy liabilities arising from their breach of these agreements.
We utilize and may in the future increase our utilization of independent contractors in a number of jurisdictions in which we operate, including India, Russia and Ukraine. We currently depend on these independent contractors for certain software development activities.
We utilize and may in the future increase our utilization of independent contractors in a number of jurisdictions in which we operate, including India, Russia, Ukraine and Jordan. We currently depend on these independent contractors for certain software development activities.
The COVID-19 pandemic and related health concerns relating to the outbreak significantly increased economic uncertainty and has caused economies, businesses, markets and communities around the globe to be disrupted, and in many cases, shut-down.
COVID-19 and the related health concerns relating to the outbreak significantly increased economic uncertainty and has caused economies, businesses, markets and communities around the globe to be disrupted, and in many cases, shut-down.
Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to: • finance unanticipated working capital requirements; • acquire complementary businesses, technologies, solutions or services; • develop or enhance our technological infrastructure and our existing solutions and services; • fund strategic relationships, including joint ventures and co-investments; • respond to competitive pressures; and • manage costs associated with any adverse market conditions or other macroeconomic factors.
Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to: • finance unanticipated working capital requirements; • acquire complementary businesses, technologies, solutions or services; I-13 • develop or enhance our technological infrastructure and our existing solutions and services; • fund strategic relationships, including joint ventures and co-investments; • respond to competitive pressures; and • manage costs associated with any adverse market conditions or other macroeconomic factors.
Our recent growth rates may not be sustainable or indicative of future growth. Since our founding, we have generated significant growth through acquisitions and by driving organic growth of our business.
Our recent growth rates may not be sustainable or indicative of future growth. Since our founding, we have generated significant revenue growth through acquisitions and by driving organic growth of our business.
If we I-48 receive an adverse ruling as a result of an audit, or we unilaterally determine that we have misinterpreted provisions of the tax regulations to which we are subject, there could be a material effect on our tax provision, net income or cash flows in the period or periods for which that determination is made, which could materially impact our financial results.
If we receive an adverse ruling as a result of an audit, or we unilaterally determine that we have misinterpreted provisions of the tax regulations to which we are subject, there could be a material effect on our tax provision, net income or cash flows in the period or periods for which that determination is made, which could materially impact our financial results.
These obligations include audit and oversight by the financial institutions and the imposition of mandatory corrective action, including termination, for serious violations. If an audit or self-assessment under PCI DSS or NACHA identifies any deficiencies that we need to remediate, the remediation efforts may distract our management team and be expensive and time consuming.
These obligations include audit and oversight by the financial institutions and the imposition of mandatory corrective action, including termination, for serious violations. If an audit or self-assessment under NACHA identifies any deficiencies that we need to remediate, the remediation efforts may distract our management team and be expensive and time consuming.
These factors may also cause our customers to reduce their capital expenditures, alter the mix of services purchased and otherwise slow their spending on our services. In addition, due to these conditions, many of our competitors may be more inclined I-28 to take greater or unusual risks or accept terms and conditions in contracts that we might not deem acceptable.
These factors may also cause our customers to reduce their capital expenditures, alter the mix of services purchased and otherwise slow their spending on our services. In addition, due to these conditions, many of our competitors may be more inclined to take greater or unusual risks or accept terms and conditions in contracts that we might not deem acceptable.
There has been increasing public focus by investors, customers environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. In addition, certain financial institutions, including banks and insurance companies, have made commitments regarding environmental, social and sustainability matters that they may pass on to those they provide capital to.
There has been increasing public focus by investors, customers environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability (“ESG”) matters. In addition, certain financial institutions, including banks and insurance companies, have made commitments regarding ESG matters that they may pass on to those they provide capital to.
Some of these organizations and service providers are our competitors or provide similar services and technology to our competitors, and we may not have long-term contracts with them. If these contracts are canceled or we are unable to renew them on commercially reasonable terms, or at all, our business, financial condition and I-26 results of operation could be adversely impacted.
Some of these organizations and service providers are our competitors or provide similar services and technology to our competitors, and we may not have long-term contracts with them. If these contracts are canceled or we are unable to renew them on commercially reasonable terms, or at all, our business, financial condition and results of operation could be adversely impacted.
Because of the technical nature of our solutions and services and the dynamic market in which we compete, any failure to I-29 attract and retain qualified personnel, as well as our contract workers, could have a material adverse effect on our ability to generate sales or successfully develop new solutions, client and consulting services and enhancements of existing solutions and services.
Because of the technical nature of our solutions and services and the dynamic market in which we compete, any failure to attract and retain qualified personnel, as well as our contract workers, could have a material adverse effect on our ability to generate sales or successfully develop new solutions, client and consulting services and enhancements of existing solutions and services.
In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or I-39 debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences.
In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences.
Numerous and evolving cybersecurity threats, including advanced and persisting cyber-attacks, cyber-extortion, ransomware attacks, spear phishing and social engineering schemes, the introduction of computer viruses or other malware and the physical destruction of all or portions of our information technology and infrastructure could compromise the confidentiality, availability and integrity of the data in our systems.
Numerous and evolving I-17 cybersecurity threats, including advanced and persisting cyber-attacks, cyber-extortion, ransomware attacks, spear phishing and social engineering schemes, the introduction of computer viruses or other malware and the physical destruction of all or portions of our information technology and infrastructure could compromise the confidentiality, availability and integrity of the data in our systems.
As a result of becoming a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
Any similar litigation against us could result in substantial costs, divert management’s attention and resources, and harm our business, financial condition and results of operations. The parties to our sponsor stockholders agreement hold a substantial portion of our outstanding common stock, and such parties interests may conflict with our interests and the interests of other stockholders.
Any similar litigation against us could result in substantial costs, divert management’s attention and resources, and harm our business, financial condition and results of operations. I-34 The parties to our sponsor stockholders agreement hold a substantial portion of our outstanding common stock, and such parties interests may conflict with our interests and the interests of other stockholders.
In addition, we attempt to protect our intellectual property and proprietary information by requiring our employees and consultants to enter into confidentiality, non-competition and assignment of inventions agreements. However, we cannot be certain that the steps we have taken or will take to protect and enforce our intellectual I-33 property and proprietary rights will be successful.
In addition, we attempt to protect our intellectual property and proprietary information by requiring our employees and consultants to enter into confidentiality, non-competition and assignment of inventions agreements. However, we cannot be certain that the steps we have taken or will take to protect and enforce our intellectual property and proprietary rights will be successful.
Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.
I-24 Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.
In addition, under certain circumstances, we will be required to satisfy and maintain a specified financial ratio under the terms of our Credit Facilities. While we have not previously breached and are not in breach of any of these covenants, there can be no guarantee that we will not breach these covenants in the future.
I-25 In addition, under certain circumstances, we will be required to satisfy and maintain a specified financial ratio under the terms of our Credit Facilities. While we have not previously breached and are not in breach of any of these covenants, there can be no guarantee that we will not breach these covenants in the future.
For these and other reasons, we may not be able to realize a tax benefit from the use of our NOLs. I-32 Government healthcare regulation, healthcare industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies within Health Services.
For these and other reasons, we may not be able to realize a tax benefit from the use of our NOLs. Government healthcare regulation, healthcare industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies within Health Services.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. I-34 Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
I-19 The industries in which we operate are rapidly evolving and the market for technology-enabled services that empower SMBs is relatively immature and unproven. If we are not successful in promoting the benefits of or maintaining the competitiveness of our solutions and services, our growth may be limited.
The industries in which we operate are rapidly evolving and the market for technology-enabled services that empower SMBs is relatively immature and unproven. If we are not successful in promoting the benefits of or maintaining the competitiveness of our solutions and services, our growth may be limited.
We are dependent on payment card networks, such as Visa and MasterCard, and payment processors, such as Worldpay and PayPal, and if we fail to comply with the applicable requirements of our payment network or payment processors, they can seek to fine us, suspend us or terminate our registrations through our bank sponsors.
We are dependent on payment card networks, such as Visa and MasterCard, and payment processors, such as Worldpay and PayPal, and if we fail to comply with the applicable requirements of the payment networks or our payment processors, they can seek to fine us, suspend us, terminate our agreements and/or terminate our registrations through our bank sponsors.
Conversely, pandemics, epidemics and outbreaks may significantly and temporarily increase demand in certain industries and markets in which we operate. For example, the COVID-19 pandemic generally increased demand for, and utilization of, telehealth services, and increased demand from customers shifting to technology-focused, digital-first business models.
Conversely, pandemics, epidemics and outbreaks may significantly and temporarily increase demand in certain industries and markets in which we operate. For example, COVID-19 generally increased demand for, and utilization of, telehealth services, and increased demand from customers shifting to technology-focused, digital-first business models.
We may incur increased development costs and delays in delivering solutions if we need to upgrade our software or healthcare devices to be in compliance with these varying and evolving standards. In addition, further delays in interpreting these standards may result in postponement or cancellation of our clients’ decisions to purchase our software solutions.
We may incur increased development I-33 costs and delays in delivering solutions if we need to upgrade our software or healthcare devices to be in compliance with these varying and evolving standards. In addition, further delays in interpreting these standards may result in postponement or cancellation of our clients’ decisions to purchase our software solutions.
Changes in accounting rules, assumptions and/or judgments could materially and adversely affect us. Accounting rules and interpretations for certain aspects of our operations are highly complex and involve significant assumptions and judgment. These complexities could lead to a delay in the preparation and dissemination of our financial statements.
I-39 Changes in accounting rules, assumptions and/or judgments could materially and adversely affect us. Accounting rules and interpretations for certain aspects of our operations are highly complex and involve significant assumptions and judgment. These complexities could lead to a delay in the preparation and dissemination of our financial statements.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (“the Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of The Nasdaq Stock Market and other applicable securities rules and regulations.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of The Nasdaq Stock Market and other applicable securities rules and regulations.
At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We can give no assurance that our efforts will remediate these material weaknesses in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future.
At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We can give no assurance that our efforts will remediate this material weakness in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future.
As a result, we are a “controlled company” within the meaning of the corporate governance standards of the rules of The Nasdaq Stock Market.
As a result, we are a “controlled company” within the meaning of the corporate governance standards of the rules of The Nasdaq Stock Market (“Nasdaq”).
If our operating metrics or our estimates are not accurate representations of our business, or if investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to I-24 these figures, our reputation may be significantly harmed, and our operating and financial results could be adversely affected.
If our operating metrics or our estimates are not accurate representations of our business, or if investors do not perceive our operating metrics to be accurate, or if we discover material inaccuracies with respect to these figures, our reputation may be significantly harmed, and our operating and financial results could be adversely affected.
In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. The healthcare industry is heavily regulated at the local, state and federal levels.
In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. I-32 The healthcare industry is heavily regulated at the local, state and federal levels.
Further, we have key customers and a more pronounced customer concentration in certain markets. Consequently, the loss of any of our key customers or any significant reduction in their usage of our solutions and services may reduce our sales revenue and net profit.
I-20 Further, we have key customers and a more pronounced customer concentration in certain markets. Consequently, the loss of any of our key customers or any significant reduction in their usage of our solutions and services may reduce our sales revenue and net profit.
Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our business, results of operations and financial condition. I-40 Security and Privacy of Health-Related Information .
Any investigation or proceeding related to these laws, even if unwarranted or without merit, may have a material adverse effect on our business, results of operations and financial condition. Security and Privacy of Health-Related Information .
We incur significant increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
I-36 We incur significant increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives. As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue. If we are not able to maintain and enhance our reputation and brand recognition, our business and results of operations may be harmed.
Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue. I-19 If we are not able to maintain and enhance our reputation and brand recognition, our business and results of operations may be harmed.
I-38 Our sending of commercial emails and text messages and certain other telephonic services must comply with the Telephone Consumer Protection Act, and future legislation, regulatory actions, or litigation could adversely affect our business.
I-31 Our sending of commercial emails and text messages and certain other telephonic services must comply with the Telephone Consumer Protection Act, and future legislation, regulatory actions, or litigation could adversely affect our business.
If we are unable to effectively manage the risks and difficulties of investing to grow I-15 our business, building relationships and developing new solutions as we encounter them, our business, financial condition and results of operations may suffer.
If we are unable to effectively manage the risks and difficulties of investing to grow our business, building relationships and developing new solutions as we encounter them, our business, financial condition and results of operations may suffer.
We may not compete effectively and competitive pressures might prevent us from acquiring and maintaining the customer base necessary for us to be successful. We may also potentially face competition from our current partners.
We may not compete effectively and competitive pressures might prevent us from acquiring and maintaining the customer base necessary for us to be successful. I-14 We may also potentially face competition from our current partners.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created I-38 by the Securities Act or the rules and regulations thereunder.
Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could result in: • loss of revenues; • loss of clients; • loss of client and cardholder data; • fines imposed by payment networks; • harm to our business or reputation resulting from negative publicity; • exposure to fraud losses or other liabilities; • additional operating and development costs; or • diversion of management, technical or other resources, among other consequences.
Defects in our information technology systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could result in: • loss of revenues; • loss of clients; • loss of client and cardholder data; • fines imposed by payment networks or bank sponsors; • harm to our business or reputation resulting from negative publicity; • exposure to fraud losses or other liabilities; • additional operating and development costs; or • diversion of management, technical or other resources, among other consequences.
We may be subject to patent, trademark and other intellectual property infringement claims, which may be time-consuming, and cause us to incur significant liability and increase our costs of doing business.
I-28 We may be subject to patent, trademark and other intellectual property infringement claims, which may be time-consuming, and cause us to incur significant liability and increase our costs of doing business.
I-43 We do not intend to rely on all of these exemptions. However, as long as we remain a “controlled company,” we may elect in the future to take advantage of any of these exemptions.
We do not intend to rely on all of these exemptions. However, as long as we remain a “controlled company,” we may elect in the future to take advantage of any of these exemptions.
I-18 We may not be able to continue to expand our share of our existing vertical markets or expand into new vertical markets, which would inhibit our ability to grow and increase our profitability.
We may not be able to continue to expand our share of our existing vertical markets or expand into new vertical markets, which would inhibit our ability to grow and increase our profitability.
The solutions and services we deliver are designed to process complex transactions and provide reports and other information on those transactions, all at very high volumes and processing speeds.
I-16 The solutions and services we deliver are designed to process complex transactions and provide reports and other information on those transactions, all at very high volumes and processing speeds.
I-25 If we are unable to retain our current customers, which are primarily SMBs, or sell additional functionality and services to them, our revenue growth may be adversely affected.
If we are unable to retain our current customers, which are primarily SMBs, or sell additional functionality and services to them, our revenue growth may be adversely affected.
The termination of our registration with the payment networks or our relationships with the payment processors, or any changes in payment network, payment processor or issuer rules that limit our ability to provide merchant acquiring services, could have an adverse effect on our payment processing volumes, revenues and operating costs.
The termination of our registration with the payment networks or our agreements with the payment processors, or any changes in payment network, payment processor or issuer rules that limit our ability to provide merchant services, could have an adverse effect on our payment processing volumes, revenues and operating costs.
Any of these circumstances could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations. Litigation and the outcomes of such litigation could negatively impact our future financial condition and results of operations. In the ordinary course of our business, we are, from time to time, subject to various litigation and legal proceedings.
Any of these circumstances could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations. Litigation and the outcomes of such litigation could negatively impact our future financial condition and results of operations. We are, from time to time, subject to various litigation and legal proceedings.
Factors that may affect our operating results and the ability to predict our future results and trajectory include: • our ability to increase sales to existing customers and to renew agreements with our existing customers at comparable prices; • our ability to attract new customers with greater needs for our services; • changes in our pricing policies or those of our competitors, or pricing pressure on our software and related services; • periodic fluctuations in demand for our software and services and volatility in the sales of our solutions and services; • the success or failure of our acquisition strategy; • our ability to timely develop and implement new solutions and services, as well as improve and enhance existing solutions and services, in a manner that meets customer requirements; • our ability to hire, train and retain key personnel; • any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products or services; • our ability to control costs, including our operating expenses; • any significant change in our facilities-related costs; • the timing of hiring personnel and of large expenses such as those for third-party professional services; • general economic conditions; • our ability to appropriately resolve any disputes relating to our intellectual property; and • the impact of a recession, pandemic or any other adverse global economic conditions on our business, including the impact of the ongoing COVID-19 pandemic.
Factors that may affect our operating results and the ability to predict our future results and trajectory include: • our ability to increase sales to existing customers and to renew agreements with our existing customers at comparable prices; • our ability to attract new customers with greater needs for our services; • changes in our pricing policies or those of our competitors, or pricing pressure on our software and related services; • periodic fluctuations in demand for our software and services and volatility in the sales of our solutions and services; • the success or failure of our acquisition or divestiture strategy; • our ability to timely develop and implement new solutions and services, as well as improve and enhance existing solutions and services, in a manner that meets customer requirements; • our ability to hire, train and retain key personnel; • any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products or services; • our ability to control costs, including our operating expenses; • any significant change in our facilities-related costs; • the timing of hiring personnel and of large expenses such as those for third-party professional services; • technological developments, including new uses for generative AI; • general economic conditions; • our ability to appropriately resolve any disputes relating to our intellectual property; and • the impact of a recession, pandemic or any other adverse global economic conditions on our business.
If we cannot keep pace with rapid developments and changes in the electronic payments market or are unable to introduce, develop and market new and enhanced versions of our software solutions, we may be put at a competitive disadvantage with respect to our services that incorporated payment technology. Payment-related transactions comprised approximately 14% of our revenue in 2022.
If we cannot keep pace with rapid developments and changes in the electronic payments market or are unable to introduce, develop and market new and enhanced versions of our software solutions, we may be put at a competitive disadvantage with respect to our services that incorporated payment technology. Payment-related transactions comprised approximately 17% of our revenue in 2023.
These conditions and factors may reduce the demand for our services and solutions, and more generally may adversely affect our business, results of operations and financial condition.
These conditions and factors may reduce I-22 the demand for our services and solutions, and more generally may adversely affect our business, results of operations and financial condition.
While we have experienced significant growth across our offering of solutions and services, certain solutions and services, such as our Marketing Technology Solutions, have lower margins as compared to our subscription and transaction fee services, such as our vertical Business Management Software and integrated payment solutions.
While we have experienced significant revenue growth across our offering of solutions and services, certain solutions and services, such as our Marketing Technology Solutions, have lower margins as compared to our subscription and transaction fee services, such I-21 as our vertical Business Management Software and integrated payment solutions.
In addition to taking remediation measures in response to the material weaknesses we identified, we may need to expend additional resources and provide additional management oversight in order to establish effective disclosure controls and procedures and internal control over financial reporting.
In addition to taking remediation measures in response to the current material weakness we identified, we may need to expend additional resources and provide additional management oversight in order to establish effective disclosure controls and procedures and internal control over financial reporting.
For example, consumer behavior may change regarding the use of payment card transactions, including the relative increased use of crypto-currencies, other emerging or alternative I-21 payment methods and payment card systems that we or our processing partners do not adequately support or that do not provide adequate commissions to parties like us.
For example, consumer behavior may change regarding the use of payment card transactions, including the relative increased use of crypto-currencies, other emerging or alternative payment methods and payment card systems that we or our processing partners do not adequately support or that do not provide adequate revenue to parties like us.
General inflation, including wage inflation, increases in interest rates, currency volatility as well as monetary, fiscal and policy interventions by national or regional governments in anticipation of or reaction to such events could have negative impacts on our business by increasing our operating costs and our borrowing costs as well as decreasing the capital available for our customers to purchase our solutions and services.
General inflation, including wage inflation, increases in interest rates, currency volatility as well as monetary, fiscal and policy interventions by national or regional governments in anticipation of or reaction to such events could have negative impacts on our business by increasing our operating costs and our borrowing costs as well as decreasing the capital available for our customers to purchase our solutions and services or the levels of cash we maintain for working capital.
Each of these privacy, security and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.
I-30 Privacy, security and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.
In addition, poor relations between the United States and Russia, sanctions by the United States and the EU against Russia, ongoing conflict in Ukraine or the spreading or escalation of political tensions or I-47 economic instability in surrounding areas could have an adverse impact on our third-party software development in Russia and Ukraine.
In addition, poor relations between the United States and Russia, sanctions by the United States and the EU against Russia, ongoing conflict in Ukraine and Israel or the spreading or escalation of political tensions or economic instability in surrounding areas could have an adverse impact on our third-party software development in Russia, Ukraine and Jordan.
For example, the United States government may enact significant changes to the taxation of business entities (such as the recent United States Inflation Reduction Act which, among other changes, introduced a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations).
For example, the United States government may enact significant changes to the taxation of business entities (such as the 2022 United States Inflation Reduction Act which, among other changes, introduced a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by I-40 United States corporations).
In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The Nasdaq Stock Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate I-44 governance practices.
In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.
To the extent the COVID-19 pandemic or another pandemic, epidemic or outbreak of an infectious disease adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “ Risk Factors ” section.
To the extent a pandemic, epidemic or outbreak of an infectious disease adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “ Risk Factors ” section.
The material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.
I-26 The material weakness will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.
This due diligence review, however, may not adequately uncover all of the contingent or undisclosed liabilities we may incur as a consequence of the proposed acquisition, exposing us to potentially significant, unanticipated costs, as well as potential impairment charges.
We perform a due diligence review of each of our acquisition targets. This due diligence review, however, may not adequately uncover all of the contingent or undisclosed liabilities we may incur as a consequence of the proposed acquisition, exposing us to potentially significant, unanticipated costs, as well as potential impairment charges.
The loss, destruction or unauthorized modification of client or cardholder data could result in significant fines, sanctions and proceedings or actions against us by the payment networks, governmental bodies, our customers, our I-22 clients’ customers or others, which could have a material adverse effect on our business, financial condition and results of operations.
The loss, destruction or unauthorized modification of client or cardholder data could result in significant fines, sanctions and proceedings or actions against us by the payment networks, payment processors, sponsor banks, governmental bodies, our customers, our clients’ customers or others, which could have a material adverse effect on our business, financial condition and results of operations.
Additionally, if we or our subcontractor business associates fail to comply with HIPAA or contractual requirements, or are otherwise involved in a HIPAA data breach, the Company may face significant fines and penalties, ongoing compliance requirements, reputational harm, contractual reimbursement, recoupment or other obligations and private litigation brought by impacted individuals.
Additionally, if we or our subcontractor business associates fail to comply with HIPAA or contractual requirements, or are otherwise involved in a HIPAA data breach, we may face significant fines and penalties, ongoing compliance requirements, reputational harm, contractual reimbursement, recoupment or other obligations, FTC enforcement actions and private litigation brought by impacted individuals.
Extreme weather events, as well as changes in ambient temperature and precipitation patterns, may become more frequent or severe as a result of climate change.
Extreme weather events, changing water levels, as well as changes in ambient temperature and precipitation patterns, may become more frequent or severe as a result of climate change.
The parties to our sponsor stockholders agreement own approximately 78.5% of our common stock. We have agreed to nominate to our board of directors individuals designated by Providence Strategic Growth and Silver Lake in accordance with the sponsor stockholders agreement.
The parties to our sponsor stockholders agreement own approximately 81.6% of our common stock. We have agreed to nominate to our board of directors individuals designated by Providence Strategic Growth and Silver Lake in accordance with the sponsor stockholders agreement.
For the year ended December 31, 2022, subscription and transaction fees and Marketing Technology Solutions generated 75.0% and 21.7%, respectively, of our total revenues. To the extent our lower margin solutions and services grow as a portion of our overall business, there is an adverse impact on our aggregate profitability and margins.
For the year ended December 31, 2023, subscription and transaction fees and Marketing Technology Solutions generated 77.0% and 19.7%, respectively, of our total revenues. To the extent our lower margin solutions and services grow as a portion of our overall business, there is an adverse impact on our aggregate profitability and margins.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our global corporate headquarters is located in Denver, Colorado. In February 2020, we moved into a new office for the corporate headquarters under a sublease agreement for 50,125 square feet of office space in Denver under a lease expiring in 2031, with an option to extend the lease for an additional five years.
Biggest changeItem 2. Properties Our global corporate headquarters is located in Denver, Colorado, where we currently lease and occupy approximately 50,125 square feet of office space. The lease for this facility expires in 2031 with an option to extend the lease for an additional five years.
We believe that these facilities are sufficient for our current needs and that additional space will be available to accommodate the expansion of our businesses should they be needed. Additionally, we also often take on leases when we acquire businesses, and we look to optimize our overall lease footprint in conjunction with any new leases assumed in an acquisition. I-49
We believe that these facilities are sufficient for our current needs and that additional space will be available to accommodate the expansion of our businesses should they be needed. Additionally, we also often take on leases when we acquire businesses, and we explore optimization of our overall lease footprint in conjunction with any new leases assumed in an acquisition.
We also maintain 22 additional office locations throughout the United States, three offices in Canada, two offices in the United Kingdom, two offices in New Zealand and one office in Jordan. We lease all of our facilities and do not own any real property.
We also lease 16 additional office locations throughout the United States, three offices in Canada, two offices in the United Kingdom, and one office in Jordan, several of which include office spaces that are subleased to third parties. We do not own any real property.
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In October 2023, the Company subleased approximately 24,000 square feet of the Denver office space for an initial three year period with an option for the subtenant to extend.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are from time to time subject to various legal proceedings, claims and governmental inspections, audits, or investigations that arise in the ordinary course of our business. We believe that the ultimate resolution of these matters would not be expected to have a material adverse effect on our business, financial condition or operating results. Item 4.
Biggest changeItem 3. Legal Proceedings We are from time to time subject to various legal proceedings, claims and governmental inspections, audits, or investigations that arise in or outside the ordinary course of our business. The information contained in “Note 17 — Commitments and Contingencies” in the Notes to the Consolidated Financial Statements is incorporated by reference into this Item. Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock repurchase activity under our stock repurchase program during the quarter ended December 31, 2022 was as follows: Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) (2) Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands, except per share and share amounts) October 1, 2022 - October 31, 2022 631,845 $ 9.17 631,845 $ 72,427 November 1, 2022 - November 30, 2022 878,491 $ 7.41 878,491 $ 65,914 December 1, 2022 - December 31, 2022 1,344,522 $ 6.52 1,344,522 $ 57,146 Total 2,854,858 2,854,858 (1) On June 14, 2022, the Board of Directors of the Company approved a stock repurchase program with authorization to purchase up to $50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022 (as subsequently expanded, the “Repurchase Program”).
Biggest changeThe stock repurchase activity under our stock repurchase program during the quarter ended December 31, 2023 was as follows: Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands, except per share and share amounts) October 1, 2023 - October 31, 2023 246,723 $ 9.91 246,723 $ 63,516 November 1, 2023 - November 30, 2023 515,268 $ 8.74 515,268 $ 59,012 December 1, 2023 - December 31, 2023 1,930,756 $ 9.86 1,930,756 $ 39,973 Total 2,692,747 2,692,747 (1) On June 14, 2022, our Board approved a stock repurchase program (as subsequently amended, the “Repurchase Program”) with authorization to purchase up to $50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022.
Stock Performance Graph The following performance graph and related information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and shall not be incorporated by reference into any registration statement or other document filed by us with the SEC, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
II-1 Stock Performance Graph The following performance graph and related information shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and shall not be incorporated by reference into any registration statement or other document filed by us with the SEC, whether made before or after the date of this Annual Report on Form 10-K, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
The following graph and related information shows a comparison of the cumulative total return for our common stock, Nasdaq Composite Index and Nasdaq US Small Cap Software Index between July 1, 2021 (the date our common stock commenced trading on the Nasdaq) through December 31, 2022. All values assume an initial investment of $100 and reinvestment of any dividends.
The following graph and related information shows a comparison of the cumulative total return for our common stock, Nasdaq Composite Index and Nasdaq US Small Cap Software Index between July 1, 2021 (the date our common stock commenced trading on the Nasdaq) through December 31, 2023. All values assume an initial investment of $100 and reinvestment of any dividends.
Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization.
Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization.
Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs.
Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at our discretion, depending on market conditions and corporate needs.
Dividend Policy We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business.
Dividend Policy We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business, including through acquisitions.
II-1 (2) On November 7, 2022, our Board of Directors approved an expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock ($100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.
On November 7, 2022, our Board approved an expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock ($100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 7/1/21 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 EverCommerce Common Stock $ 100.00 $ 93.69 $ 89.49 $ 75.00 $ 51.36 $ 62.10 $ 42.27 Nasdaq Composite Index $ 100.00 $ 99.49 $ 107.73 $ 97.92 $ 75.94 $ 72.82 $ 72.07 Nasdaq US Small Cap Software Index $ 100.00 $ 98.17 $ 93.88 $ 81.86 $ 60.33 $ 57.95 $ 57.85 Recent Sales of Unregistered Securities The Company did not sell any equity securities during the year ended December 31, 2022 that were not registered under the Securities Act.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock. 7/1/21 9/30/21 12/31/21 3/31/22 6/30/22 9/30/22 12/31/22 3/31/23 6/30/23 9/30/23 12/31/23 EverCommerce Common Stock $ 100.00 $ 93.69 $ 89.49 $ 75.00 $ 51.36 $ 62.10 $ 42.27 $ 60.11 $ 67.27 $ 56.99 $ 62.67 Nasdaq Composite Index $ 100.00 $ 99.49 $ 107.73 $ 97.92 $ 75.94 $ 72.82 $ 72.07 $ 84.16 $ 94.94 $ 91.03 $ 103.37 Nasdaq US Small Cap Software Index $ 100.00 $ 98.17 $ 93.88 $ 81.86 $ 60.33 $ 57.95 $ 57.85 $ 68.60 $ 73.99 $ 70.25 $ 84.36 Recent Sales of Unregistered Securities The Company did not sell any equity securities during the year ended December 31, 2023 that were not registered under the Securities Act.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol “EVCM.” Holders As of March 10, 2023, there were 77 registered holders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol “EVCM.” Holders As of March 8, 2024, there were 66 registered holders of record of our common stock.
Purchases of Equity Securities by the Issuer or Affiliated Purchaser During the quarter ended December 31, 2022, we repurchased $21.1 million in shares of our common stock under our stock repurchase program, including transaction fees.
Purchases of Equity Securities by the Issuer or Affiliated Purchaser During the quarter ended December 31, 2023, we repurchased $26.0 million in shares of our common stock under our stock repurchase program, including transaction fees.
The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of its board of directors. The Company expects to fund repurchases with existing cash on hand.
The Repurchase Program does not obligate us to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board. We expect to fund repurchases with existing cash on hand.
Added
On November 5, 2023, our Board approved an additional expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of our common stock (from $100.0 million to $150.0 million in total) and extended the expiration of the Repurchase Program through December 31, 2024.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] II- 2 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations II- 3 Item 7A. Quantitative and Qualitative Disclosures About Market Risk II- 25 Item 8. Financial Statements and Supplementary Data II- 26
Biggest changeItem 6. [Reserved] II- 2 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations II- 3 Item 7A. Quantitative and Qualitative Disclosures About Market Risk II- 19 Item 8. Financial Statements and Supplementary Data II- 20

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeComparison of the years ended December 31, 2022 and 2021 Year ended December 31, 2022 2021 (in thousands) Revenues: Subscription and transaction fees $ 465,345 $ 351,831 Marketing technology solutions 134,596 118,275 Other 20,805 20,033 Total revenues 620,746 490,139 Operating expenses: Cost of revenues (1) (exclusive of depreciation and amortization presented separately below) 217,375 162,230 Sales and marketing (1) 119,059 93,789 Product development (1) 71,622 49,506 General and administrative (1) 132,483 110,369 Depreciation and amortization 110,801 101,437 Total operating expenses 651,340 517,331 Operating loss (30,594) (27,192) Interest and other expense, net (33,902) (36,111) Loss on debt extinguishment — (28,714) Net loss before income tax benefit (64,496) (92,017) Income tax benefit 4,680 10,051 Net loss $ (59,816) $ (81,966) II-12 (1) Includes stock-based compensation expense as follows: Year ended December 31, 2022 2021 (in thousands) Cost of revenues $ 373 $ 39 Sales and marketing 1,503 506 Product development 1,854 551 General and administrative 23,088 20,999 Total stock-based compensation expense $ 26,818 $ 22,095 Revenues Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) Revenues: Subscription and transaction fees $ 465,345 $ 351,831 $ 113,514 32.3 % Marketing technology solutions 134,596 118,275 16,321 13.8 % Other 20,805 20,033 772 3.9 % Total revenues $ 620,746 $ 490,139 $ 130,607 26.6 % Revenues increased $130.6 million or 26.6% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Biggest changeComparison of the years ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 (in thousands) Revenues: Subscription and transaction fees $ 520,234 $ 465,345 Marketing technology solutions 133,162 134,596 Other 21,973 20,805 Total revenues 675,369 620,746 Operating expenses: Cost of revenues (1) (exclusive of depreciation and amortization presented separately below) 231,007 217,375 Sales and marketing (1) 123,561 119,059 Product development (1) 75,614 71,622 General and administrative (1) 132,235 132,483 Depreciation and amortization 104,201 110,801 Impairment 6,325 — Total operating expenses 672,943 651,340 Operating income (loss) 2,426 (30,594) Interest and other expense, net (46,407) (33,902) Net loss before income tax (expense) benefit (43,981) (64,496) Income tax (expense) benefit (1,639) 4,680 Net loss $ (45,620) $ (59,816) (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2023 2022 (in thousands) Cost of revenues $ 464 $ 373 Sales and marketing 1,672 1,503 Product development 2,273 1,854 General and administrative 21,150 23,088 Total stock-based compensation expense $ 25,559 $ 26,818 II-10 Comparison of the years ended December 31, 2023 and 2022 (percentage of revenue) The following table provides the key components of operating costs within our results of operations as a percentage of revenue for the year ended December 31, 2023 compared to the same period in 2022.
On November 7, 2022, our Board of Directors approved an expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock ($100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.
On November 7, 2022, our Board approved an expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock ($100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.
Our revenue recognition policies are discussed in more detail under “Critical Accounting Policies and Significant Judgments and Estimates.” Subscription and Transaction Fees : Revenue includes (i) recurring monthly, quarterly and annual SaaS subscriptions and software license and maintenance fees from the sale of our Business Management, Customer Engagement and Billing and Payment solutions; (ii) payment processing fees based on the transaction volumes processed through our integrated payment solutions and processing fees based on transaction volumes for our revenue cycle management, chronic care management and health insurance clearinghouse solutions; and (iii) membership subscriptions and our share of rebates from suppliers generated though group purchasing programs.
Our revenue recognition policies are discussed in more detail under “Critical Accounting Estimates.” Subscription and Transaction Fees : Revenue includes (i) recurring monthly, quarterly and annual SaaS subscriptions and software license and maintenance fees from the sale of our Business Management, Customer Engagement and Billing and Payment solutions; (ii) payment processing fees based on the transaction volumes processed through our integrated payment solutions, and processing fees based on transaction volumes for our revenue cycle management, chronic care management and health insurance clearinghouse solutions; and (iii) membership subscriptions and our share of rebates from suppliers generated though group purchasing programs.
We go to market with suites of solutions that are aligned to our three core verticals: (i) the EverPro suite of solutions in Home Services; (ii) the EverHealth suite of solutions within Health Services; and (iii) the EverWell suite of solutions in Fitness & Wellness Services.
II-3 We go to market with suites of solutions that are aligned to our three core verticals: (i) the EverPro suite of solutions in Home Services; (ii) the EverHealth suite of solutions within Health Services; and (iii) the EverWell suite of solutions in Fitness & Wellness Services.
Our year-over-year Pro Forma Revenue Growth Rate is calculated as though all acquisitions closed as of the end of the latest period were closed as of the first day of the prior year period presented.
Our year-over-year Pro Forma Revenue Growth Rate is calculated as though all acquisitions completed as of the end of the latest period were closed as of the first day of the prior year period presented.
For the qualitative assessments, we reviewed factors including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in any key personnel, any changes in composition of carrying amount of our assets and changes in our stock price. There were no reasonable changes to the methods and assumptions that would have resulted in an impairment.
For the qualitative assessments, we reviewed factors including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in any key personnel, any changes in composition of carrying amount of our assets II-17 and changes in our stock price. There were no reasonable changes to the methods and assumptions that would have resulted in an impairment.
We will continue to expand efforts to market our solutions directly to SMBs through online digital marketing, raising brand awareness at conferences and events, and other marketing channels. We believe this investment, coupled with our attractive unit economics, will enable us to grow our customer base and continue our strategy of profitable growth.
We will continue to expand efforts to II-5 market our solutions directly to SMBs through online digital marketing, raising brand awareness at conferences and events, and other marketing channels. We believe this investment, coupled with our attractive unit economics, will enable us to grow our customer base and continue our strategy of profitable growth.
We offer several vertically-tailored suites of solutions, each of which follows a similar and repeatable go-to-market playbook: offer a “system of action” Business Management Software that streamlines daily business workflows, integrate highly complementary, value-add adjacent solutions and complete gaps in the value chain to create end-to-end solutions.
We offer several vertically-tailored suites of solutions, each of which follows a similar and repeatable go-to-market playbook: offer a “system of action” Business Management Software that streamlines daily business workflows, integrate highly complementary, value-add adjacent solutions and complete gaps in the value chain to create integrated solutions.
Software and subscription services dedicated for use by our sales and marketing organization, and outside services contracted for sales and marketing purposes are also included in sales and marketing expense. Sales commissions that are incremental to obtaining a customer contract are deferred and amortized ratably over the estimated period of our relationship with II-10 that customer.
Software and subscription services dedicated for use by our sales and marketing organization, and outside services contracted for sales and marketing purposes are also included in sales and marketing expense. Sales commissions that are incremental to obtaining a customer contract are deferred and amortized ratably over the estimated period of our relationship with that customer.
II-20 Revenue Recognition Revenues are derived from subscription and transaction fees, marketing technology solutions, and other revenues. We recognize revenue when our customers obtain control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
Revenue Recognition Revenues are derived from subscription and transaction fees, marketing technology solutions, and other revenues. We recognize revenue when our customers obtain control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
We have concluded that we do not possess the ability to control the underlying services provided by third parties in the fulfillment of our obligations to customers and therefore recognize revenue net of interchange fees retained by the card issuing financial institutions and fees charged by payment networks.
We have concluded that we do not possess the ability to control the underlying services provided by third parties in the fulfillment of our obligations to customers and therefore recognize revenue net of interchange fees retained by the card issuing financial institutions II-16 and fees charged by payment networks.
For example, the recurring or re-occurring revenue gained/lost from existing customers in November 2022 is the difference between the recurring or re-occurring revenue generated in November 2022 and the same such revenue generated in November 2021, for customers with a start date prior to December 1, 2021 and no end date or cancelled relationship on or after November 1, 2022.
For example, the recurring or re-occurring revenue gained/lost from existing customers in November 2023 is the difference between the recurring or re-occurring revenue generated in November 2023 and the same such revenue generated in November 2022, for customers with a start date prior to December 1, 2022 and no end date or cancelled relationship on or after November 1, 2023.
Sales and Marketing Sales and marketing expense consists primarily of employee costs for our sales and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and sales commissions. Sales and marketing expenses also include advertising costs, travel-related expenses and costs to market and promote our products, direct customer acquisition costs, costs related to conferences and events and partner/broker commissions.
II-8 Sales and Marketing Sales and marketing expense consists primarily of employee costs for our sales and marketing personnel, including salaries, benefits, bonuses, stock-based compensation and sales commissions. Sales and marketing expenses also include advertising costs, travel-related expenses and costs to market and promote our products, direct customer acquisition costs, costs related to conferences and events and partner/broker commissions.
With respect to Eurocurrency borrowings, interest payments are due on the II-19 last business day of the interest period applicable to the borrowing and, in the case of a Eurocurrency borrowing with an interest period of more than three months’ duration, each day prior to the last day of such interest period that occurs at intervals of three months’ duration after the first day of such interest period.
With respect to Eurocurrency borrowings, interest payments are due on the last business day of the interest period applicable to the borrowing and, in the case of a Eurocurrency borrowing with an interest period of more than three months’ duration, each day prior to the last day of such interest period that occurs at intervals of three months’ duration after the first day of such interest period.
In including such pre-acquisition revenue, Pro Forma Revenue Growth Rate allows II-7 us to measure the underlying revenue growth of our business as it stands as of the end of the respective period, which we believe provides insight into our then-current operations.
In including such pre-acquisition revenue, Pro Forma Revenue Growth Rate allows us to measure the underlying revenue growth of our business as it stands as of the end of the respective period, which we believe provides insight into our then-current operations.
This program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board of Directors. The Company expects to fund repurchases with existing cash on hand.
This Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board. The Company expects to fund repurchases with existing cash on hand.
An analysis of our results of operations and cash flows for the year ended December 31, 2020, including a discussion of the year ended December 31, 2021 as compared to the year ended December 31, 2020, has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 15, 2022, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview EverCommerce is a leading provider of integrated, vertically-tailored software-as-a-service (“SaaS”) solutions for service-based small- and medium-sized businesses (“service SMBs”).
An analysis of our results of operations and cash flows for the year ended December 31, 2021, including a discussion of the year ended December 31, 2022 as compared to the year ended December 31, 2021, has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 16, 2023, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview EverCommerce is a leading provider of integrated, vertically-tailored software-as-a-service (“SaaS”) solutions for service-based small- and medium-sized businesses (“service SMBs”).
Our platform spans across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications. Today, we serve more than 685,000 customers across three core verticals: Home Services; Health Services; and Fitness & Wellness Services.
Our platform spans across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications. Today, we serve more than 708,000 customers across three core verticals: Home Services; Health Services; and Fitness & Wellness Services.
Our net pro forma revenue retention rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of solutions, new acquisitions and our ability to retain our customers.
Our net pro forma revenue retention rate II-4 may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of solutions, new acquisitions and our ability to retain our customers.
In calculating Pro Forma Revenue Growth Rate, we add the revenue from acquisitions for the reporting periods prior to the date of acquisition (including estimated purchase accounting adjustments) to our results of operations, and then calculate our revenue growth rate between the two reported periods.
In calculating Pro Forma Revenue Growth Rate, we add the revenue from acquisitions for the reporting periods prior to the date of acquisition (including estimated purchase accounting adjustments), and then calculate our revenue growth rate between the two reported periods.
Our ability to cross sell additional products and services to our existing customers can increase customer II-4 engagement with our suite of solutions and thus have a positive impact on our net pro forma revenue retention rate.
Our ability to cross sell additional products and services to our existing customers can increase customer engagement with our suite of solutions and thus have a positive impact on our net pro forma revenue retention rate.
Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. II-24
Our utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. II-18
For example, the recurring or reoccurring revenue lost from cancelled customers in November 2022 is the difference between the recurring or re-occurring revenue generated in November 2022 and the same such revenue generated in November 2021, for customers that cancelled on or after November 1, 2021 and before November 1, 2022.
For example, the recurring or reoccurring revenue lost from cancelled customers in November 2023 is the difference between the recurring or re-occurring revenue generated in November 2023 and the same such revenue generated in November 2022, for customers that cancelled on or after November 1, 2022 and before November 1, 2023.
The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA on a consolidated basis.
II-7 The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA on a consolidated basis.
ASC 740 requires deferred tax assets and liabilities to be recognized for temporary differences between the tax basis and financial reporting basis of assets and liabilities, computed at the expected tax rates for the periods in which the assets or liabilities will be realized, as well as for the expected tax benefit (expense) of net operating loss and tax credit carryforwards.
GAAP requires deferred tax assets and liabilities to be recognized for temporary differences between the tax basis and financial reporting basis of assets and liabilities, computed at the expected tax rates for the periods in which the assets or liabilities will be realized, as well as for the expected tax (expense) benefit of net operating loss and tax credit carryforwards.
We believe that our existing cash, cash equivalents and restricted cash, availability under our Credit Facilities (as defined below) and our cash flows from operations will be sufficient to fund our working capital requirements and planned capital expenditures, and to service our debt obligations for at least the next twelve months.
We believe that our existing cash, cash equivalents and restricted cash, availability under our Credit Facilities, and our cash flows from operations will be sufficient to fund our working capital requirements and planned capital expenditures, and to service our debt obligations for at least the next twelve months.
Our platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly specialized demands, as well as highly complementary solutions that complete end-to-end offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.
Our platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly specialized demands, as well as highly complementary solutions that provide fully-integrated offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.
The Company recorded $0.4 million and $0.1 million in unrecognized tax benefits for the years ended December 31, 2022 and 2021, respectively. Valuation allowances are currently assessed based on scheduling the reversal of temporary differences, without consideration to future projections of income, given the Company’s history of losses.
The Company recorded $0.2 million and $0.4 million in unrecognized tax benefits for the years ended December 31, 2023 and 2022, respectively. Valuation allowances are currently assessed based on scheduling the reversal of temporary differences, without consideration to future projections of income, given the Company’s history of losses.
Our business benefits from attractive unit economics. Approximately 95% of our revenue in the years ended December 31, 2022 and 2021 was recurring or re-occurring, and we maintained an annualized net pro forma revenue retention rate of approximately 100% for the quarter ended December 31, 2022.
Our business benefits from attractive unit economics. Approximately 97% of our revenue in the years ended December 31, 2023 and 2022 was recurring or re-occurring, and we maintained an annualized net pro forma revenue retention rate of approximately 95% for the quarter ended December 31, 2023.
The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company recorded an additional $16.7 million and $14.5 million in valuation allowance on our deferred tax assets in 2022 and 2021, respectively, using the aforementioned approach.
The tax benefits recognized in the consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company recorded an additional $4.1 million and $16.7 million in valuation allowance on our deferred tax assets in 2023 and 2022, respectively, using the aforementioned approach.
Our Pro Forma Revenue Growth rate was 15.6% for the year ended December 31, 2022 reflective of the underlying growth in our business including new customers and providing more solutions to existing customers.
Our Pro Forma Revenue Growth rate was 8.6% for the year ended December 31, 2023 reflective of the underlying growth in our business including new customers and providing more solutions to existing customers.
As of December 31, 2022, we were in compliance with the covenants under the Credit Facilities.
As of December 31, 2023, we were in compliance with the covenants under the Credit Facilities.
“Risk Factors—Risks Related to Our Business—Our recent growth rates may not be sustainable or indicative of future growth and we expect our growth rate to slow,” “—We may reduce our rate of acquisitions and may be unsuccessful in achieving continued growth through acquisitions” and “—Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.
“Risk Factors—Risks Related to Our Business—Our recent growth rates may not be sustainable or indicative of future growth,” “—We may reduce our rate of acquisitions and may be unsuccessful in achieving our objectives through acquisitions, dispositions or other strategic transactions” and “—Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.
Pursuant to the guarantee agreement, EverCommerce Intermediate Inc. and various of our subsidiaries are guarantors of the obligations under the Credit Facilities. Pursuant to the collateral agreement, the Credit Facilities are secured by liens on substantially all of our assets, including our intellectual property and the equity interests of our various subsidiaries, including EverCommerce Solutions Inc.
Pursuant to the collateral agreement, the Credit Facilities are secured by liens on substantially all of our assets, including our intellectual property and the equity interests of our various subsidiaries, including EverCommerce Solutions Inc.
Through acquisitions and organic growth of our business, the number of customers on our platform increased from over 600,000 at the end of 2021 to more than 685,000 at the end of 2022. We will continue to invest in our efficient go-to-market strategy as we further penetrate our addressable markets.
Through organic growth of our business and acquisitions, the number of customers on our platform increased from over 685,000 at the end of 2022 to approximately 708,000 at the end of 2023. We will continue to invest in our efficient go-to-market strategy as we further penetrate our addressable markets.
Effective October 31, 2022, the Company entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $200.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate (the “Swap Agreement”).
Effective October 31, 2022, we entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $200.0 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate (the “Initial Swap”).
We believe that investment in technology development will contribute to our long-term growth, but may also negatively impact our short-term profitability. In 2022, we continued to invest in scalable operations and necessary functions to support operating as a public company. In 2023 and beyond, smaller incremental investments will be needed to support Sarbanes-Oxley compliance.
We believe that investment in technology development will contribute to our long-term growth, but may also negatively impact our short-term profitability. In 2023, we continued to invest in scalable operations and necessary functions to support operating as a public company, including Sarbanes-Oxley compliance.
While our significant accounting policies are described in further detail in Note 2 in the notes to the consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Recent Accounting Pronouncements See Note 2 in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for a discussion of accounting pronouncements recently adopted and recently issued accounting pronouncements not yet adopted and their potential impact to our financial statements.
Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for a discussion of accounting pronouncements recently adopted and recently issued accounting pronouncements not yet adopted and their potential impact to our financial statements.
The applicable rate for the Term Loans and the Revolver loans is 3% for Eurocurrency borrowings and 2% for ABR Borrowings, in each case subject to change based on our first lien net leverage ratio.
The applicable rate for the Term Loans and the Revolver was 3.0% for Adjusted SOFR borrowings and 2.0% for ABR borrowings, in each case subject to change based on our first lien net leverage ratio.
In particular, Marketing Technology Solutions revenue generally has a higher cost of revenue as a percentage of revenue than our subscription and transaction fee revenue. For the year ended December 31, 2022, revenue from subscription and transaction fees increased 32.3% compared to the year ended December 31, 2021, whereas Marketing Technology Solutions revenue increased 13.8%.
In particular, Marketing Technology Solutions revenue generally has a higher cost of revenue as a percentage of revenue than our subscription and transaction fee revenue. For the year ended December 31, 2023, revenue from subscription and transaction fees increased 11.8% compared to the year ended December 31, 2022, whereas Marketing Technology Solutions revenue decreased 1.1%.
The ABR rate represents the greater of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and an adjusted LIBOR rate for a one month interest period plus 1%.
The ABR represents the highest of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and the Adjusted SOFR for a one month interest period plus 1%.
Judgement can be involved when determining the stand-alone selling price of products and services. For the majority of the Company’s SaaS, on-premise license and professional services, we establish a stand-alone selling price based on observable selling prices to similar classes of customers.
For the majority of the Company’s SaaS, on-premise license and professional services, we establish a stand-alone selling price based on observable selling prices to similar classes of customers.
Interest and Other Expense, net Interest and other expense, net, primarily consists of interest expense on long-term debt, net of interest income, as well as loss on interest rate swap. It also includes amortization expense of financing costs and discounts, as well as realized and unrealized gains and losses.
Interest and Other Expense, net Interest and other expense, net, primarily consists of interest expense on long-term debt, net of interest income. It also includes amortization expense of financing costs and discounts, as well as realized and unrealized gains and losses related to interest rate swap agreements. Income Tax (Expense) Benefit U.S.
Stock Repurchase Program On June 14, 2022, our Board of Directors approved a stock repurchase program wi th authorization to purchase up to $50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022 (the “Repurchase Program”).
II-15 Stock Repurchase Program On June 14, 2022, our Board approved a stock repurchase program (as subsequently amended, the “Repurchase Program”) with authorization to purchase up to $50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022.
On March 14, 2023, the Company entered into a second interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $100.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate.
Additionally, effective March 31, 2023, the Company entered into a second interest rate swap agreement in connection with our Credit Facilities for a notional amount of $100.0 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate (the “Second Swap”).
The cash used was primarily driven by the repurchase and retirement of shares of our common stock of $43.0 million. For additional information regarding our repurchase and retirement of shares of our common stock, refer to Note 11 in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
For additional information regarding our repurchase and retirement of shares of our common stock, refer to Note 11. Equity in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
In fulfillment of our payment processing services, we partner with third-party merchants and processors who assist us in fulfillment of our obligations to customers.
Transaction fees relate to payment processing and group purchasing program administration services. In fulfillment of our payment processing services, we partner with third-party merchants and processors who assist us in fulfillment of our obligations to customers.
Cash Flow from Investing Activities During the year ended December 31, 2022, net cash used in investing activities was $18.1 million. The cash used was driven primarily by costs to develop software of $15.5 million. The remainder was for purchases of property and equipment. During the year ended December 31, 2021, net cash used in investing activities was $379.7 million.
During the year ended December 31, 2022, net cash used in investing activities of $18.1 million was related primarily to costs to develop software of $15.5 million and $2.6 million for purchases of property and equipment.
Contract terms for other revenue arrangements are generally short-term, with stated contract terms that are less than one year. Our professional services associated with our subscription revenue generally relate to standard implementation, configuration, installation, or training services applied to both SaaS and on-premise deployment models. Marketing revenue related professional service fees are derived from website design, creation or enhancement services.
Our professional services associated with our subscription revenue generally relate to standard implementation, configuration, installation, or training services applied to both SaaS and on-premise deployment models. Marketing revenue related professional service fees are derived from website design, creation or enhancement services.
The increase in cash provided for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to higher cash collections from our subscription and transaction fees and marketing technology solutions of approximately $121.2 million offset by investments made to support the growth of our business including personnel expenses of $51.2 million, costs directly related to the delivery of our services and products of $41.3 million and the timing of payments.
The increase in cash provided for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to higher cash collections from our subscription and transaction fees and marketing technology solutions, which includes revenues from payment processing of approximately $62.3 million, partially offset by higher interest payments of $15.1 million, costs directly related to the delivery of our services and products of $12.4 million, and higher investments made to support the growth of our business including personnel expenses of $2.7 million.
Non-GAAP Financial Measures Adjusted Gross Profit Adjusted Gross Profit is a key performance measure that our management uses to assess our operational performance, as it represents the results of revenues and direct costs, which are key components of our operations.
We calculate Adjusted Gross Profit as gross profit adjusted to exclude non-cash charges of depreciation and amortization allocated to cost of revenues. Adjusted Gross Profit is a key performance measure that our management uses to assess our operational performance, as it represents the results of revenues and direct costs, which are key components of our operations.
As of December 31, 2022, there was $543.1 million outstanding under our Credit Facilities, all of which was related to the Term Loans as no amounts were outstanding under the Revolver. The effective interest rate on the Term Loans was approximately 5.2% for the year ended December 31, 2022.
As of December 31, 2023, there was $537.6 million outstanding under our Credit Facilities, all of which was related to the Term Loans as no amounts were outstanding under the Revolver. The effective interest rate on the Term Loans was approximately 8.5% for the year ended December 31, 2023, excluding the effect of any interest rate swap agreements.
Transaction services contracts with customers are generally for a term of one month and automatically renew each month. We also receive rebates from contracted suppliers in exchange for our program administration services.
Transaction services contracts with customers are generally for a term of one month and automatically renew each month. We also receive rebates from contracted suppliers in exchange for our program administration services. Rebates earned are based on a defined percentage of the purchase price of goods and services sold to members.
GAAP requires us to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
GAAP requires us to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. While our significant accounting policies are described in further detail in Note 2.
Key Business and Financial Metrics In addition to our results and measures of performance determined in accordance with Generally Accepted Accounting Principles (”GAAP”), we believe the following key business and non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions.
Claims against us relating to any acquisition may necessitate our seeking claims against the seller for which the seller may not indemnify us or that may exceed the seller’s indemnification obligations.” Key Business and Financial Metrics In addition to our results and measures of performance determined in accordance with Generally Accepted Accounting Principles (”GAAP”), we believe the following key business and non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions.
Marketing Technology Solutions: Marketing technology solutions consist of digital advertising management and consumer connection services. Revenue generated from digital advertising management services is recognized on a ratable basis over the service period as the customer simultaneously receives and consumes the benefits of the management services evenly throughout the contract period.
Revenue generated from digital advertising management services is recognized on a ratable basis over the service period as the customer simultaneously receives and consumes the benefits of the management services evenly throughout the contract period. Revenue generated from consumer connection services may be recognized at either a point-in-time or an over-time basis as each connection is delivered.
Borrowings under the Credit Facilities are available as ABR or Eurocurrency borrowings. ABR borrowings under the Credit Facilities accrue interest at an alternate base rate plus an applicable rate, and Eurocurrency borrowings accrue interest at an adjusted LIBOR rate plus an applicable rate.
Prior to July 1, 2023, borrowings under the Credit Facilities were available as ABR or Eurocurrency borrowings. ABR borrowings under the Credit Facilities accrued interest at an alternate base rate plus an applicable rate, and Eurocurrency borrowings accrued interest at a LIBOR rate plus an applicable rate.
This increase was primarily driven by additional product development related personnel expenses of $16.3 million, as a result of investments in our technology teams to support our various solutions as well as centralized security operations, information technology and cloud engineering.
The increase was a result of investments in our technology and teams to support our various solutions as well as centralized security operations, information technology and cloud engineering, driven by an additional $1.5 million of personnel and compensation expense, $1.3 million of software and tools, and $1.3 million of technology spend.
In determining the total consideration that we expect to receive, we include variable consideration only to the extent that it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved. Consideration subject to a constraint on revenue recognition has not been significant.
In determining the total consideration that we expect to receive, we include variable consideration only to the extent that it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved. There have not been any material changes during 2023 in the underlying estimates and assumptions in determining probability of variable consideration.
Our SaaS offerings and license support services are generally recognized ratably over the contractual period that the services are delivered, beginning on the date our service is made available to customers.
SaaS offerings and license support services are generally recognized ratably over the contractual period that the services are delivered, beginning on the date our service is made available to customers, while on-premise perpetual or term licenses are generally recognized at the point in time when the software is made available to the customer to download or use.
II-17 Cash Flows The following table sets forth cash flow data: Year ended December 31, 2022 2021 (in thousands) Net cash provided by operating activities $ 64,802 $ 37,482 Net cash used in investing activities (18,080) (379,668) Net cash provided by (used in) financing activities (47,309) 341,183 Effect of foreign currency exchange rate changes on cash (1,148) 224 Net decrease in cash, cash equivalents and restricted cash $ (1,735) $ (779) Cash Flow from Operating Activities Net cash provided by operating activities was $64.8 million for the year ended December 31, 2022, compared to $37.5 million for the year ended December 31, 2021.
See Part I, Item 1A .“Risk Factors.” Cash Flows The following table sets forth cash flow data: Year ended December 31, 2023 2022 (in thousands) Net cash provided by operating activities $ 104,605 $ 64,802 Net cash used in investing activities (38,020) (18,080) Net cash used in financing activities (66,630) (47,309) Effect of foreign currency exchange rate changes on cash 400 (1,148) Net increase (decrease) in cash, cash equivalents and restricted cash $ 355 $ (1,735) Cash Flow from Operating Activities Net cash provided by operating activities was $104.6 million for the year ended December 31, 2023, compared to $64.8 million for the year ended December 31, 2022.
Although we expect to continue to acquire companies and other assets in the future, such acquisitions pose a number of challenges and risks. For additional information, see Part I. Item 1A.
We believe that our methodology, track record and reputation for sourcing, evaluating and integrating acquisitions positions us as an “acquirer-of-choice” for potential targets. Although we expect to continue to acquire companies and other assets in the future, such acquisitions pose a number of challenges and risks. For additional information, see Part I. Item 1A.
The Company did not identify indicators of impairment for the years ended December 31, 2022, 2021 and 2020. In the future, if there are material changes in the underlying estimates and assumptions pertaining to the impairment assessment, the financial statements could be materially impacted.
In the future, if there are material changes in the underlying estimates and assumptions pertaining to the impairment assessment, the financial statements could be materially impacted.
Cost of Revenues Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) Cost of revenues (exclusive of depreciation and amortization presented separately below) $ 217,375 $ 162,230 $ 55,145 34.0 % Percentage of revenues 35.0 % 33.1 % Cost of revenues increased by $55.1 million or 34.0% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
II-11 Cost of Revenues Year Ended December 31, Change 2023 2022 Amount % (dollars in thousands) Cost of revenues (exclusive of depreciation and amortization presented separately below) $ 231,007 $ 217,375 $ 13,632 6.3 % Cost of revenues increased by $13.6 million, or 6.3%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Amounts borrowed under the Revolver may be repaid and re-borrowed through maturity of the Revolver in July 2026. The Term Loans mature in July 2028. The Term Loans may be repaid or prepaid but may not be re-borrowed.
We are obligated to pay a fixed fronting fee for letters of credit of 0.125% per annum. Amounts borrowed under the Revolver may be repaid and re-borrowed through maturity of the Revolver in July 2026. The Term Loans mature in July 2028. The Term Loans may be repaid or prepaid but may not be re-borrowed.
The Initial Term Loans, Revolver and Additional Term Loans are collectively referred to herein as the “Credit Facilities.” Simultaneously with the execution of the Credit Facilities, we and various of our subsidiaries entered into a collateral agreement and guarantee agreement.
These debt arrangements are collectively referred to herein as the “Credit Facilities”. Simultaneously with the execution of the Credit Facilities, we and various of our subsidiaries entered into a collateral agreement and guarantee agreement. Pursuant to the guarantee agreement, EverCommerce Intermediate Inc. and various of our subsidiaries are guarantors of the obligations under the Credit Facilities.
The arrangement has a term of five years with a fixed rate in the agreement of 4.2295%.
The Initial Swap has a term of five years with a fixed rate in the agreement of 4.212% as amended in June 2023.
Interest and Other Expense, net Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) Interest and other expense, net $ 33,902 $ 36,111 $ (2,209) (6.1) % Percentage of revenues 5.5 % 7.4 % Interest and other expense, net, decreased by $2.2 million or 6.1% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Interest and Other Expense, net Year Ended December 31, Change 2023 2022 Amount % (dollars in thousands) Interest and other expense, net $ 46,407 $ 33,902 $ 12,505 36.9 % Interest and other expense, net, increased by $12.5 million, or 36.9%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
II-16 Liquidity and Capital Resources To date, our primary sources of liquidity have been net cash provided by operating activities, proceeds from preferred stock and common stock issuances, including our recent initial public offering (“IPO”) of common stock, 2021 private placement of common stock and proceeds from long-term debt. Our primary use of liquidity has been acquisitions of businesses.
Liquidity and Capital Resources To date, our primary sources of liquidity have been net cash provided by operating activities, proceeds from equity issuances and long-term debt. Our primary use of liquidity through 2021 was primarily associated with acquisitions of businesses.
The cash used was driven primarily by acquisition of companies, net of cash acquired, of $364.9 million. The remainder was for purchases of property and equipment and cost to develop software. Cash Flow from Financing Activities During the year ended December 31, 2022, net cash used in financing activities was $47.3 million.
Cash Flow from Investing Activities During the year ended December 31, 2023, net cash used in investing activities of $38.0 million was related primarily to costs to develop software of $20.0 million, the acquisition of Kickserv, net of cash acquired, for approximately $15.0 million and $3.0 million for purchases of property and equipment.
Revenue generated from consumer connection services may be recognized at either a point-in-time or an over-time basis as each connection is delivered. Marketing technology solutions service related contracts are typically short-term with stated contract terms that are less than one year. II-21 Other: Other revenues generally consist of fees associated with the sale of distinct professional services and hardware.
Marketing technology solutions service related contracts are typically short-term with stated contract terms that are less than one year. Other: Other revenues generally consist of fees associated with the sale of distinct professional services and hardware. Contract terms for other revenue arrangements are generally short-term, with stated contract terms that are less than one year.
General and Administrative Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) General and administrative $ 132,483 $ 110,369 $ 22,114 20.0 % Percentage of revenues 21.3 % 22.5 % General and administrative expenses increased by $22.1 million or 20.0% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
General and Administrative Year Ended December 31, Change 2023 2022 Amount % (dollars in thousands) General and administrative $ 132,235 $ 132,483 $ (248) (0.2) % General and administrative expenses decreased by $0.2 million, or 0.2%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
II-8 Adjusted EBITDA Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes.
Transaction-related and other non-recurring costs are excluded as they are not representative of our underlying operating performance. Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes.
These applications include: customer health scoring, customer support systems, real-time alerts, NPS-based II-3 customer feedback collection, review generation and automation, reputation management, customer satisfaction surveying and a digital communication suite, among others.
Our software provides customer listening capabilities with real-time customer surveying and analysis to allow standalone businesses and multi-location brands to receive VoC insights and manage the customer experience lifecycle. These applications include: customer health scoring, customer support systems, real-time alerts, NPS-based customer feedback collection, review generation and automation, reputation management, customer satisfaction surveying and a digital communication suite, among others.
For a description of our recent acquisitions, see Note 3 in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.
Acquisition related costs are specific deal-related costs such as legal fees, financial and tax due diligence, consulting and escrow fees. Other non-recurring costs are expenses such as system implementation costs and severance related to planned restructuring activities. Acquisition related costs and other non-recurring costs are excluded as they are not representative of our underlying operating performance.
Other amortization includes amortization for capitalized contract acquisition costs. Transaction-related costs are specific deal-related costs such as legal fees, financial and tax due diligence, consulting and escrow fees. Other non-recurring costs are expenses such as impairment charges, system implementation costs, severance expense related to planned restructuring activities, and costs associated with integration and transformational improvements.
Product Development Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) Product development $ 71,622 $ 49,506 $ 22,116 44.7 % Percentage of revenues 11.5 % 10.1 % Product development expenses increased by $22.1 million or 44.7% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Product Development Year Ended December 31, Change 2023 2022 Amount % (dollars in thousands) Product development $ 75,614 $ 71,622 $ 3,992 5.6 % Product development expenses increased by $4.0 million, or 5.6%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Performance Obligations and Standalone Selling Price: Our contracts at times include the sale of multiple promised goods or services that have been determined to be distinct. The transaction price for contracts with multiple performance obligations is allocated based on the relative stand-alone selling price of each performance obligation within the contract.
The transaction price for contracts with multiple performance obligations is allocated based on the relative stand-alone selling price of each performance obligation within the contract. Judgement can be involved when determining the stand-alone selling price of products and services.
II-13 Sales and Marketing Year ended December 31, Change 2022 2021 Amount % (dollars in thousands) Sales and marketing $ 119,059 $ 93,789 $ 25,270 26.9 % Percentage of revenues 19.2 % 19.1 % Sales and marketing expenses increased by $25.3 million or 26.9% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Sales and Marketing Year Ended December 31, Change 2023 2022 Amount % (dollars in thousands) Sales and marketing $ 123,561 $ 119,059 $ 4,502 3.8 % Sales and marketing expenses increased by $4.5 million, or 3.8%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+7 added−1 removed2 unchanged
Biggest changeThis swap agreement is effective March 31, 2023 and has a term of approximately 4.5 years with a fixed rate in the agreement of 3.969%. Foreign currency exchange risk We have foreign currency risks related to certain of our foreign subsidiaries, primarily in Canada, Jordan, the United Kingdom, New Zealand and Australia.
Biggest changeForeign currency exchange risk We have foreign currency risks related to certain of our foreign subsidiaries, primarily in Canada, Jordan, the United Kingdom, New Zealand and Australia. The functional currencies of our significant foreign operations include the Canadian dollar, Great British pound and the New Zealand dollar.
We may in the future hedge our foreign currency exposure and may use currency forward contracts, currency options or other common derivative financial instruments to reduce foreign currency risk. It is difficult to predict the effect that future hedging activities would have on our operating results. II-25
We may in the future hedge our foreign currency exposure and may use currency forward contracts, currency options or other common derivative financial instruments to reduce foreign currency risk. It is difficult to predict the effect that future hedging activities would have on our operating results. II-19
Effective October 31, 2022, the Company entered into the Swap Agreement in connection with the Company’s Credit Facilities for a notional amount of $200.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate. The Swap Agreement has a term of 5 years with a fixed rate in the agreement of 4.2295%.
Effective October 31, 2022, the Company entered into the Initial Swap in connection with the Company’s Credit Facilities for a notional amount of $200.0 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate.
Based on the outstanding balance of the Credit Facilities as of December 31, 2022, for every 100 basis point increase in the ABR rate or Adjusted LIBOR rate, we would incur approximately $3.4 million of additional annual interest expense.
Based on the outstanding balance of the Credit Facilities as of December 31, 2023, for every 100 basis point increase in the Adjusted SOFR rate, we would incur approximately $2.4 million of additional annual interest expense.
The functional currencies of our significant foreign operations include the Canadian dollar, Great British pound and the New Zealand dollar. We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results. We currently do not hedge foreign currency exposure.
We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results. We currently do not hedge foreign currency exposure.
Additionally, on March 14, 2023, the Company entered into a second interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $100.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate.
Additionally, effective March 31, 2023, the Company entered into a Second Swap in connection with the Company’s Credit Facilities for a notional amount of $100.00 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate.
Removed
Amounts borrowed under our Credit Facilities accrue interest at a per annum rate equal to the ABR rate or Adjusted LIBOR rate, in each case plus an applicable margin of 3.25%.
Added
We are exposed to market risks related to fluctuations in interest rates on amounts borrowed under the Credit Facility.
Added
Following an amendment in June 2023, borrowings under the Credit Facilities bear interest at the Company’s option at ABR plus an applicable rate, or at a forward-looking term rate based upon SOFR, plus (i) (a) with respect to Term Loans, credit spread adjustments of 0.11448%, 0.26161%, 0.42826% and 0.71513% for interest periods of one, three, six and twelve months, respectively and (b) with respect to revolving loans, a credit spread adjustment of 0.0% (“Adjusted SOFR”) plus (ii) an applicable rate, in each case with such applicable rate based on the Company’s first lien net leverage ratio.
Added
The ABR represents the highest of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and the Adjusted SOFR for a one month interest period plus 1%.
Added
The applicable rate for the Term Loans and the Revolver is 3.0% for Adjusted SOFR borrowings and 2.0% for ABR borrowings, in each case subject to change based on our first lien net leverage ratio. For our Credit Facility, interest rate changes impact future earnings and cash flows, assuming other factors are held constant.
Added
As of December 31, 2023, we had $537.6 million outstanding under our Term Loan and $— outstanding under our Revolving Loan.
Added
The Initial Swap has a term of five years with a fixed rate in the agreement of 4.2120%, as amended in June 2023.
Added
The Second Swap agreement has a term of approximately 4.5 years with a fixed rate in the agreement of 3.951%, as amended in June 2023.

Other EVCM 10-K year-over-year comparisons