Executive Summary / Key Takeaways

• Strategic Refocus Drives Value: EverCommerce is executing a significant strategic pivot, divesting its lower-margin Marketing Technology Solutions to become a pure-play vertical SaaS and embedded payments platform. This sharpens its focus on core, higher-margin offerings, aiming to maximize long-term growth and margin accretion.
• Payments as a Core Growth Engine: Accelerating payments adoption and utilization is a top priority, supported by strategic investments in product capabilities and go-to-market motions. Payments revenue (excluding divested fitness solutions) grew 6.8% year-over-year in Q2 2025, contributing a high ~95% gross margin and driving overall profitability.
• Operational Efficiency & Margin Expansion: Ongoing transformation and optimization initiatives, including decentralizing operations and leveraging AI in internal workflows, are yielding tangible results. Adjusted EBITDA margin expanded over 230 basis points year-over-year to 30.4% in Q2 2025, reflecting significant cost discipline and scale economies.
• Technological Edge with AI Integration: The company is embedding AI across its product suite for enhanced prospect targeting, customer engagement, and clinical efficiency, while also deploying AI agents in customer support to resolve 25-50% of tickets with high satisfaction, reinforcing its competitive moat and driving efficiency.
• Positive Outlook & Financial Flexibility: Strong Q2 2025 results exceeded guidance, leading to an increased full-year 2025 Adjusted EBITDA outlook of $171 million to $177 million. Recent credit facility repricing and extension provide enhanced financial flexibility and annual interest savings of $1.3 million.

EverCommerce's Vertical SaaS Vision: A Foundation for Growth

EverCommerce Inc. stands as a leading provider of integrated software-as-a-service (SaaS) solutions, purpose-built for the vast and fragmented landscape of service-based small and medium-sized businesses (SMBs). Incorporated in 2016 as PaySimple Holdings, the company's foundational strategy has always centered on delivering end-to-end solutions that streamline operations, enhance customer relationships, and accelerate growth across micro-verticals. Its core business today is concentrated within three primary verticals: EverPro for Home Services, EverHealth for Health Services, and EverWell for Wellness Services, with EverPro and EverHealth collectively contributing approximately 95% of consolidated revenue.

The company's overarching strategy is to provide a "system of action" software that acts as the central hub for an SMB's operations. This vertically-tailored approach offers a comprehensive suite covering lead management, scheduling, dispatch, estimating, invoicing, and critical value-add solutions like payments and customer experience management. This integrated platform is a key technological differentiator, offering tangible benefits such as streamlined front and back-office processes and polished customer-facing experiences. By consolidating these functions, EverCommerce's technology helps SMBs achieve greater operational efficiency and a seamless data flow across their business, a significant advantage in competing against more specialized, single-point solutions.

EverCommerce is also at the forefront of integrating artificial intelligence (AI) into its offerings and internal operations. In its products, AI-powered features are enhancing prospect marketing, customer engagement, and customer survey tools, leading to improved targeting, engagement, and actionable insights for its SMB clients. For EverHealth, the product roadmap includes AI-driven tools like ambient scribe and appointment no-show predictors, designed to make physician practices more efficient. Internally, AI agents deployed in the chat channel for EverPro's mobile solutions are already resolving 25% to 50% of support tickets with over 85% customer satisfaction, generating significant cost avoidance and demonstrating the practical benefits of this technological investment. This dual focus on product innovation and operational efficiency through AI is a critical component of EverCommerce's competitive moat, contributing directly to its market positioning and long-term growth strategy.

The market for service-based SMBs remains highly fragmented and largely unaddressed by integrated solutions, presenting a substantial growth opportunity for EverCommerce. While the company operates as a niche player, its strength lies in its diversified, integrated, and sector-specific solutions that resonate with smaller businesses. This positions EverCommerce to capture market share from businesses currently relying on disparate tools or manual processes.

Strategic Transformation: Sharpening the Focus

EverCommerce has undergone a significant strategic transformation to sharpen its focus and unlock greater value. This journey began in March 2024 with the divestiture of its Fitness Solutions, a move completed in phases through July 2024. Building on this, in late 2024, the company initiated a strategic review of its Marketing Technology Solutions, culminating in a commitment in March 2025 to sell these assets. This business is now classified as discontinued operations, with an expected sale in 2025.

The rationale behind these divestitures is clear: to transition EverCommerce into a pure-play vertical SaaS and embedded payments platform. Management believes that removing the campaign-based, lower-margin revenue stream of marketing technology will highlight the higher-growth, higher-gross margin businesses within its core SaaS and Payments segments, thereby maximizing long-term growth, margin accretion, and shareholder value. This strategic pivot is supported by an ongoing organizational restructuring, which includes decentralizing functions to bring decision-making closer to customer needs. Key leadership appointments, such as Josh McCarter as CEO of EverPro in Q3 2024 and Evan Berlin as CEO of EverHealth in late 2024/early 2025, are instrumental in building dedicated management teams and driving efficiency within these core verticals.

The Payments Powerhouse: Driving Growth and Profitability

At the heart of EverCommerce's refined strategy is the acceleration of payments adoption and utilization, which stands as the company's highest priority. The business model, traditionally focused on landing customers with core SaaS and then cross-selling/upselling additional features, is evolving towards an integrated sales motion where business management software includes embedded payments from the outset. This approach is designed to enhance customer value, drive higher revenue, and expand margins.

Payments revenue, excluding the divested fitness solutions, grew 6.8% year-over-year on a pro forma basis in Q2 2025 and now accounts for approximately 21% of overall revenue. Crucially, this revenue stream typically contributes a high gross margin of approximately 95%, making its growth a significant driver of overall Adjusted EBITDA margin expansion. The company's annualized Total Payment Volume (TPV) reached approximately $12.9 billion in Q2 2025, representing nearly 7% year-over-year growth. Notably, TPV growth in EverCommerce's top solutions is significantly higher, ranging from 12% to 13% year-over-year, and these solutions remain less than 10% penetrated, indicating substantial untapped market potential and a positive mix shift towards higher-take-rate offerings.

EverCommerce is making strategic, high-ROI investments in its payments platform and team. These include product enhancements such as Canadian processing capabilities, mobile check capture, ACH processing, and Google/Apple Pay support, all aimed at expanding the addressable payments volume within its systems. Concurrently, go-to-market and sales resources are being deployed to catalyze incremental enablement and utilization. The company's focus on the "payments funnel"—increasing customer "attach" (new customers taking payments), "activation" (actively processing), and "wallet share expansion"—is yielding strong results. In Q2 2025, customers enabled for more than one solution grew 32% year-over-year to 261,000, while customers actively utilizing more than one solution surged 29% year-over-year to 112,000. These metrics, coupled with record attach rates in flagship EverPro and EverHealth software, serve as critical leading indicators for future revenue growth, improved customer retention, and enhanced profitability.

Financial Performance: Delivering on the Promise

EverCommerce's strategic refocus and operational discipline are translating into solid financial performance. For the second quarter of 2025, the company reported total revenue from continuing operations of $148.0 million, a 5.3% increase year-over-year on a GAAP basis and a robust 7.4% increase on a pro forma basis, which adjusts for prior-year divestitures. This performance exceeded the top end of management's guidance range.

Profitability metrics also demonstrated significant improvement. Adjusted EBITDA for Q2 2025 reached $45.0 million, representing a 14% year-over-year increase and a 30.4% margin, expanding over 230 basis points from the prior year. This margin expansion is attributable to cost optimization initiatives, a favorable mix shift towards higher-margin products like payments, and overall scale economies. For the six months ended June 30, 2025, the cost of revenues (exclusive of depreciation and amortization) as a percentage of revenue declined by approximately 60 basis points year-over-year, contributing to higher gross margins. The combined percentage of revenue for core operating costs (cost of revenue, sales & marketing, product development, and general & administrative) decreased by 190 basis points year-over-year for the same period, underscoring the effectiveness of the company's optimization efforts.

Liquidity and capital management remain strong. As of June 30, 2025, EverCommerce held $151.1 million in cash and cash equivalents. The company's net leverage, calculated per its credit facility, stood at approximately 2x, reflecting effective deleveraging from strong operational performance and free cash generation.

In a move to enhance financial flexibility, EverCommerce successfully repriced and extended its credit facility in July 2025. This included refinancing its $529.4 million Term Loan, extending its maturity to July 2031, and reducing the applicable margin by 25 basis points to SOFR plus 2.25%. The $155 million revolving credit facility was also extended to July 2030 (stepping down to $125 million in July 2026), with reduced applicable margins. These actions are projected to yield approximately $1.3 million in annual interest savings. Furthermore, the company continues to execute its share repurchase program, buying back 2 million shares for $20.6 million in Q2 2025, with $51.1 million remaining under the authorization, which extends through December 31, 2026.

Competitive Landscape: Differentiating in a Dynamic Market

EverCommerce operates in a highly competitive and fragmented market, where its integrated, sector-specific SaaS solutions carve out a distinct niche. Compared to competitors like ServiceTitan, which specializes deeply in home services field management, EverCommerce offers a broader, multi-vertical integrated suite. While ServiceTitan might excel in highly tailored field operations tools, EverCommerce's holistic approach, integrating payments, customer experience, and business management across diverse service sectors, provides a more seamless data flow and comprehensive solution for its customers. This diversification is a key strength, allowing EverCommerce to appeal to a wider range of SMBs.

Against financial technology giants like Block Inc. (SQ), EverCommerce differentiates by embedding payments directly within its vertical-specific business management software, offering a more integrated ecosystem rather than a payments-first financial tool. For instance, EverHealth's tailored functionality for health services provides a deeper, more specialized solution than Block's generally accessible payment offerings. While Block may lead in payment-specific innovation and broad consumer reach, EverCommerce's integrated approach fosters stronger customer loyalty within its niche markets.

When compared to enterprise CRM leaders like Salesforce Inc. (CRM) or marketing automation specialists like HubSpot Inc. (HUBS), EverCommerce's focus on SMBs with integrated tools provides a more accessible and cost-effective solution. Its sector-specific suites, such as those for home services or wellness, are designed to provide materially better performance for niche users by addressing their unique workflows, a level of specialization that larger, broader platforms like Salesforce might struggle to match without significant customization. While Salesforce is renowned for rapid AI integrations and HubSpot for marketing agility, EverCommerce's strategic AI applications are geared towards practical, immediate efficiency gains for its target SMBs.

The competitive landscape also includes indirect threats from standalone accounting software or general productivity tools, as well as emerging AI-driven automation platforms. However, EverCommerce's competitive moats—its integrated platform and sector-specific suites—help protect its market position. The integrated platform streamlines operations, leading to stronger customer loyalty and potentially improved gross margins. The sector-specific suites exploit weaknesses in rivals' generality, allowing EverCommerce to capture market share in niche segments where its tailored functionality provides a significant advantage. The massive, underpenetrated payments opportunity within its existing customer base further underscores its strategic positioning, as it currently captures only a fraction of the total payment volume processed through its systems.

Outlook and Risks: Charting the Path Ahead

EverCommerce's management is optimistic about the company's trajectory, driven by its strategic transformation and ongoing operational improvements. For the third quarter of 2025, the company expects total revenue from continuing operations to be between $146.5 million and $149.5 million, with Adjusted EBITDA projected to be $41 million to $43 million. The full-year 2025 guidance for total revenue remains unchanged at $581 million to $601 million, but Adjusted EBITDA guidance has been increased to a range of $171 million to $177 million.

This raised EBITDA outlook reflects management's confidence in the back half of the year, balancing strong first-half performance with planned reinvestments into growth initiatives, particularly in payments and cross-sell opportunities. The company maintains a "prudent" approach to its revenue guidance, acknowledging potential macroeconomic shifts while relying on a bottoms-up build based on the resilience of its core EverPro (repair and fix) and EverHealth verticals. Management anticipates that the investments and transformation efforts undertaken in 2024 will position the company for revenue reacceleration in the latter half of 2025 and into 2026.

Despite the positive outlook, EverCommerce faces several pertinent risks. The macroeconomic climate, with ongoing pressures from global geopolitical conflicts, inflation, and rising interest rates, could still adversely affect revenues and demand. The company is also evaluating the impact of the "One Big Beautiful Bill Act," signed in July 2025, which introduces changes to federal tax law effective after December 31, 2025. Legal proceedings, such as the putative class action lawsuit regarding the CEO Approval Right, present ongoing uncertainties, though the company believes it has meritorious defenses. Furthermore, a material weakness in internal control over financial reporting, identified as of June 30, 2025, requires active remediation efforts, which the company is pursuing.

Conclusion

EverCommerce is undergoing a profound transformation, strategically shedding non-core assets to emerge as a focused, efficient leader in vertical SaaS and embedded payments. This pivot, underpinned by a robust integrated technology platform and aggressive AI integration, positions the company to capitalize on the vast, underpenetrated market of service-based SMBs. The strong financial performance in Q2 2025, marked by revenue growth and significant Adjusted EBITDA margin expansion, demonstrates the early success of these initiatives.

With payments adoption as its highest priority and a clear roadmap for technological innovation and operational optimization, EverCommerce is building a formidable competitive moat. The company's prudent financial management, evidenced by its deleveraging and recent credit facility enhancements, provides the flexibility to fund future growth. While macroeconomic headwinds and internal control challenges remain, EverCommerce's deep vertical expertise, integrated solutions, and commitment to driving payments penetration suggest a compelling investment thesis for long-term value creation.