EVCM - NASDAQ

Thank you for standing by, and welcome to EverCommerce's Second Quarter 2023 Earnings Call. My name is Michelle, and I will be your operator for today [Operator Instructions] As a reminder, this conference call is being recorded today, Monday, August 07, 2023. And, I'd now like to turn the conference over to Brad Korch, Senior Vice President and Head of Investor Relations for EverCommerce. Please go ahead.

Good afternoon and thank you for joining. Today's call will be led by Eric Remer, EverCommerce's Chairman and Chief Executive Officer; and Marc Thompson, EverCommerce's Chief Financial Officer. Joining them for the Q&A portion of the call is EverCommerce's President, Matt Feierstein. This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended June 30, 2023. For a link to the live or replay webcast, please visit the Investor Relations section of the EverCommerce website, www.evercommerce.com. A slide presentation and the earnings release are also directly available on the site. Please turn to Page 2 of our earnings call presentation while I review our safe harbor statement. Statements made on this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements, except as required by law. We will also refer to certain non-GAAP financial measures to provide additional information to you, our investors. A reconciliation of non-GAAP to GAAP historical measures is provided in both our earnings press release and our earnings call presentation. I will now turn it over to our CEO, Eric Remer. Please continue.

Thank you, Brad. On today's call, I'll highlight second quarter results and discuss key customer trends and metrics before turning the call to Marc to dive deeper into our financials. EverCommerce continues its strong start of 2023 with solid revenue growth, particularly within our Software payment solution and a very robust adjusted EBITDA against the top end of the second quarter guidance. We achieved strong bottom line performance by doubling down on balancing growth and profitability, through both active management of our cost base with the focus on efficiency, we deliver 23% of adjusted EBITDA, margins while supporting 13% year-of-year subscription transaction revenue growth, which includes our core software payment solutions and 8% year-of-year total revenue growth, with upside to profitability, we are creating the opportunity to incrementally invest in areas that can accelerate growth in 2024 and beyond. In addition to officially growing our customer base, our strategies to lead with our course system of action, SaaS solutions and then upsell and cross sell additional solutions and features to enhance customer value while driving customer expansion and revenue growth for EverCommerce. Payments is the best illustration of the strategy. During the second quarter, our payments revenue grew 32% year-over-year. EverCommerce provides virtually tailored end-to-end SaaS solutions that support the highly diverse workflows and customer interactions to professionals and home services, health services and fitness and wellness services used to automate manual processes, generating new business and create more loyal customers. As the leading service commerce platform, we provide system of action software across many micro verticals, which, in turn, drive the workflows to help our customers, generate new business, fulfil services, manage day-to-day operations and engage with our customers. Upsell and across sell in our existing customer's additional features, services and products is not only important for ARPU growth, it is important because it enhances the value our customers receive from the relationship with EverCommerce, which ultimately translates to lower-churn and higher retention. For several quarters, we've disclosed a number of customers that are utilizing more than one solution, but this is a data point we continue to measure, we believe a metric that is even more reflective of our current cross-sell progress is a number of customers that have contracted and imported for more than one solution. While this is a measure with a track progress slightly higher in the follow-up customer revenue realization, for areas like payments enablement specifically, it marks the critical milestone in the customer's journey towards integrated set of solutions that power more than business. As of the end of the second quarter, while we continue to see expansion of customers utilize more than one solution to products with 75,000, the number of customers that have contracted imported for two or more products with 29% year-over-year to approximately 162,000. And with over 685,000 total EverCommerce customers as at the beginning of 2023, we continue to have a very large and better opportunity to continue to grow this space of multi-solution customers. Finally, when looking back over the trailing 12 months, our annualized net revenue retention or NRR for core software payment solution remains above 100%. Embedded payments is our most mature and accretive cross-sell solution and is a key element of our land and expand strategy. Year-over-year, payment revenue includes 32% contributing to our margin expansion, given its gross market profile. Additionally, payments revenue is percent of total revenue grew more than 300 base points over the past 12 months. Second quarter annualized total payments value or TPV, was approximately $11.4 billion, representing a 30% year-over-year growth. We expect TPV and overall payments revenue to grow as we continue doing better payment solutions into our core system of actions. Accelerating payments attachment and utilization are key elements of our long-term growth plan and we continue to see success throughout our course system of action solutions. We are actively testing and implementing new strategic initiatives, designed to increase the attachment for payment capabilities to drive more payment-enabled customers back to processing and further increase the wallet share of customers that are already processing. And lastly, I want to briefly touch upon our current progress in integrating generative AI into our business operations, both within the solutions combined to our end customers, as well as with the development of our products and services, support our customers and operational scalability. As an example, in Q2, we launched AI driven capabilities within our surveyed products that create significant efficiencies for our customers, now to analyze, interpret and act upon large quantities of raw and unstructured survey feedback. These insights allow customers to more quickly and efficiently implement programs to accelerate revenue as well as generate recommendations for risk mitigation from negative feedback. Early customer feedback has been incredibly positive relative to even greater efficiency that our solutions can now bring to their operation. We are excited about this early progress. We will continue to leverage AI to drive greater efficiencies in our operation even more innovative and impactful offerings to our customers. Now, I'll pass it over to Marc, who will review our financial results in more detail, as well as provide third quarter and update a full year of 2023 guidance.

Thanks, Eric. Total revenue in the second quarter was $170.1 million, up 8.1% from the prior year period. Within total revenue, subscription and transaction revenue was $130.3 million, up 12.7% from the prior year period, and revenue from marketing technology solutions was $34.5 million down 2% from the prior year period. The strong performance in subscription and transaction revenue, at 12.7% growth and in line with our long-term target, was largely due to the solid execution of our growth strategy to provide customers a core system of action software solutions and driving expansion by promoting cross sell and upsell opportunities, leading with payments. Since the second half of 2022, we've seen headwinds to growth in our marketing technology solutions, and while this continued through the second quarter, we are starting to see early signs of stabilization. The end of the second quarter, LTM revenue was $651.1 million, up 15.2% year-over-year on a reported basis, and 11.7% on a pro-forma basis. As a reminder, we calculate our pro forma revenue growth 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, including before the time we completed the acquisition. We believe the pro forma growth rate provides the best insight into the underlying growth dynamics of our business. Our reported growth rate for Q2 was equivalent to our pro forma growth rate, because we did not complete any acquisition during the relevant periods. Second quarter, adjusted EBITDA was $38.8 million, representing a 22.8% margin, versus 19.6% in the second quarter of 2022, and 26.2% growth year-over-year. Additionally, LTM adjusted EBITDA was a $136.1 million, representing a 20.9% margin. In the second quarter, we're clearly delivering towards our full year of 2023 objectives by exceeding guidance and achieving record EBITDA margins. Adjusted EBITDA performance in the quarter was underscored by our focus on actively managing our operating expenses, driving operating leverage and cash flow generation. The timing and pacing of investments through the first steps was a more modest factor, and we expect to make targeted investments in the back half of the year that should enable us to enter 2024 on a solid growth footing. For example, one area of incremental investment is resources to accelerate payment adoption among our systems of action software solutions. Adjusted gross profit in the quarter was $111.9 million, representing an adjusted gross margin is 65.8%, versus 65% in Q2 2022. LTM adjusted growth profit was $425.9 million, representing an adjusted growss margin of 65.4%. The increase in growth margin is partially attributable to an increasing mix of higher margin payments revenue. And now turning to operating expenses, adjusted sales and marketing expense was $28.7 million, or 16.9% of revenue, down from 18.2% of revenue in the prior year period. Absolute adjusted sales and marketing expenses were approximately flat year-over-year due to a combination of optimization and economies of scale. Adjusted product development expense was $17.7 million, or 10.4% of revenue, down from 10.8% of revenue reported in the prior year period. Absolute adjusted product development expense grew 4.7% year-over-year, as we continued to invest in our solutions. Adjusted G&A expense was $26.6 million, or 15.7% of revenue, down from 16.5% of revenue in the prior year period. As we anniversary, the investments made in 2021 and 2022 to support our public company infrastructure, we're beginning to see meaningful operating leverage. We continued to generate significant free cash flow as we invest to grow our business. Our adjusted unlevered free cash flow for the quarter was $27.1 million, representing 21.2% year-over-year growth, and a 15.9% margin. For the last 12 months, our adjusted unlevered free cash flow was $97.5 million. Levered free cash flow, which accounts not only for debt service, but also various working capital adjustments, was $22.6 million in the quarter. This was up approximately $16.1 million year-over-year due to both growth and operating income and changes in working capital. For the trailing 12 months, levered free cash flow was $62.2 million, continuing to underscore our balance sheet flexibility. Strong free cash flow generation allows us to continue to invest in our growing business and deliver strong returns to our shareholders. It also allows us to efficiently allocate capital across the spectrum of opportunities, including the outstanding buyback authorization and M&A prospects. In the second quarter, we repurchased approximately 900,000 shares for a total cash consideration of approximately $10 million at an average price of $11.10 per share. The end of the quarter, with $83.1 million in cash and cash equivalents, and we maintain $190 million of undone capacity on our revolver. Our debt is a combination of floating and fixed rate, and total net leverage is calculated per our credit facility at the end of the quarter was approximately 2.9 times consistent with our financial policy. We have no material maturities until 2028. I'd like to finish by providing our outlook for the remainder of 2023, beginning with the third quarter. For Q3, we expect total revenue of $174 million to $178 million and we expect adjusted EBITDA of $34.5 million to $37.5 million. Our full year and 2023 revenue guidance remains $600 million to $700 million, and we are raising our adjusted EBITDA guidance again by an additional $5 million to $142 million to $148 million. As we noted on our first quarter call, continuing to execute our growth strategies, price increases and new product introductions are expected to support growth and strong margins throughout the year. Our 2023 outlook does not include any potential impacts of M&A activity that could take place. Before we begin the question-and-answer portion of the call, I want to thank the entire EverCommerce team for their efforts in delivering these strong results. Our focus continues to be optimizing our operations, managing costs effectively and delivering on our strategic priorities. Operator, we're not ready to begin the question-and-answer section of the call.

[Operator instructions] The first question comes from Kirk Materne with Evercore. Your line is open.

Yeah, thanks very much. Eric, I was wondering if you just talk about the level of activity with you all in your customer base this quarter, maybe versus the prior two quarters, just in terms of pipeline generation, how you're feeling about sort of top of funnel activity, realize marketing is still a bit challenge, but just kind of curious if you're seeing anything from a macro perspective that makes you feel perhaps a little better heading in the second half of the year if it's still that the same. Thanks.

Yeah, thanks Kirk. I appreciate the question. Yeah, I think we felt pretty good going to Q2. We saw some things specifically in the marketing service part, which is why we guided with guided and achieved what we achieved. But I think the stabilization both in that part and the continued consistency in the pipelines that were seeing in the core business of software payments, really remains on plan. So we felt really good about going to the second half, and I think that's kind of showing the guidance. Matt?

Yeah, I think you nailed that. Even that core software and payments specifically to systems of action and the addition of payment to that where from a top of funnel perspective, we see opportunities that often double down on investments, even those core areas where we see large-end markets, lots of opportunity, strong unit economics set of areas point, exactly where we expect it to be with opportunities in the second half to continue to drive top of funnel activities beyond where they are today.

And Kirk, just one thing to add to Matt said and just to answer that specifically, from macro perspective and the core verticals that we serve, we're not seeing any continued degradation that we might have saw last year.

That's great. And then Marc, one follow-up for you, you mentioned obviously some spend that was supposed to have in the first half is going in the second half. I guess just how should we interpret sort of the EBITDA guidance for the back how are the implied, I guess, for the fourth quarter, adjusted EBITDA guidance, somewhat flattish versus 2Q, is that just spend that you're maybe holding back on the first quarter coming in the model and how do you think about just sort of operating leverage in general? Thanks.

Yeah I'll start and then, if you think about, we raised after first quarter, we raised again after second quarter. We feel really good about where we are right now and then I think we've been prudent throughout the year. Obviously, we still live in that volatile world and we want to be consistent and conservative and prudent as we look at the second half.

Exactly Kirk, coming out of last year, the world was obviously changing before us and we wanted to make sure that we are actively managing our spend and pace of investment through the year. I think we've done a great job in the first half, is this the opportunity to hit the gas funnel on some initiatives that are really going to underscore the core growth strategies, payments enablement, all of that sort of stuff. So, feeling as though it's time to put a little bit more into the back half to make sure that we continue to set ourselves up for a nice '24 and beyond.

The next question comes from Brad Reback with Stifel. Your line is open.

Great. Thanks very much. I believe it was during Marc's prepared remarks, you talked about accelerated investment in payments adoption in the back half of the year. Can you maybe walk through what you're going to do differently going forward versus what you've done to try to help drive that linkage? Thanks.

Yes. Again, I don't think this is all that different than things that we've talked about in prior quarters. But from an attachment standpoint, as you think from a top of funnel down strategic standpoint, continuing to drive incremental resources from both into our PLG led products, but also where there can be some outbound sales touches into the software customer base to drive that. Front as you go down the funnel in terms of converting more of our payment-enabled users into active processing users, looking at outbound customer success resources that we have been testing and have metrics around and now have the ability to say, this is where we should double down from incremental resources from that perspective as well. And then as you go further down funnel both to get more people actively processing and expand wallet share, looking at opportunities to, like we've talked about in past quarters, expands the base of payment enablement product landscape throughout the ecosystem. So those are all areas where we are looking at and actively now for 2H that investment -- incremental investments on top will help really drive quicker execution on those strategies.

And Brad, thanks for the question. One more thing to add to that, we have implemented payment mandate in two of our solutions, which we have been -- 1 have been mandated as of August 01, and one was in the kind of early Q2. And so we're -- if that takes some time to kind of roll out those mandates, but those are positive things that we've kind of implemented in the East [ph]. Some of them just got implemented literally last week. So we're excited about the things that that brought up in addition to some mandates were put in to our software solutions.

Great. And then on -- Eric, on the AI monetization side, is that going to be direct or more indirect insomuch as that will help support future price increases broadly across the product portfolio? Thanks.

Yes. I think Brad, both. Ultimately, I think what Eric spoke to was incremental monetization. But certainly, there will be indirect monetization via just more fire higher or behind some of the products that we're able to bring to market. So we see the opportunity for both. And Eric's example was really an incremental monetization opportunity.

And the one that we didn't talk about much because I'm sure the company has different pieces of the puzzle, but we utilize and we've been utilizing AI-type capabilities internally to our operations for quite some time. And with the increased AI access, we implemented some of those in different operational capabilities internally that we'll start seeing hopefully some additional value probably 2024.

Great. Thanks very much.

The next question comes from Alexander Sklar with Raymond James. Your line is open.

Hi. Thanks for taking the question. This is John [ph] on for Alex. Eric or Matt, I know pricing has really been more of a lever this year that you've been looking to push versus prior years. I'm just curious any message you can give on price elasticity to date, if you can maybe share the percent of your base has seen an increase or maybe some of the retention dynamics surrounding that.

This is Marc. So two things. One, we come into each year with a series of pricing actions planned in for the year, and we've executed against most of those and you really -- we expect to see continuing impact from that through the year. But overall, we kind of talked about circa 3% for the year. I think that's very much still the way we think about that. In terms of churn, we historically always planned that into our internal plans and quite honestly, execute quite well through those and never really see that materialized the way we plan. So we tend to be pretty conservative in our outlook on that internally and have really not seen any real impact from that for many of the pricing actions that have been taken thus far in the first half.

I think that's the best metric. You mentioned elasticity. That's probably our best metric in the U.S. as is actually our expected and anticipated churn with all of them are running lower than where we expected. So I think we met that mark from an elasticity standpoint that would mean there's slightly more there.

Opportunity as you look at the '24 to maintain and/or increase pricing actions into '24.

Okay. That was really helpful color there. And then I know we only get logo growth annually. But I'm just curious if there's been any changes in terms of the vertical or micro verticals driving the growth that you've seen so far this year through July. Thanks.

It's been pretty consistent across the board. The one area that we talked about and we've talked about before, our fitness kind of category has been a laggard in the industry. It's starting to -- some of the client of fitnesses came out and said they're starting to see some growth in stores. But in general, the market has just been slow to recover from COVID. That's the one area within the ecosystem that we serve that we've kind of a lack of growth, but the rest of them has been pretty consistent, pretty across the board.

Thank you very much.

The next question comes from Bhavin Shah with Deutsche Bank. Your line is open.

Great. Thanks for taking my question. I just wanted to follow up on an earlier comment you made about kind of mandating payments across your solutions. What's been the customer reception to that? And how long will that take to play out to go throughout that customer base or those two respective customer bases?

Yes. So the mandate -- I'll let Matt on specific, mandate was really driven A, you kind of convert to our payments. We had about 35% in a specific vertical -- specific solution utilizing it, went off of the back book and said, if you take our payments, that's great, otherwise, you got a pretty significant price increase if you do not take it. And so we did plan -- some people might be up attrition against it. Attrition has been significantly lower than we had expected. Response has been very positive. It takes some time. Matt gives more specific in terms of the time of rollout and then ultimately seeing the value of that.

Yes. To Eric's point, there's really three outcomes from that, two that we like, the one that we really like, which is more people will sign up and take payments and start utilizing that. The second is they opt into paying an incremental amount for their software. And the third is obviously we don't like this at all and they may choose to leave the solution. Starting from the back forward, again, churn when we model it against these mandates has been lower than we expected, incremental take rate again, some of these mandates have been in place for several quarters, one that we just started this quarter, we're kind of right where we expected to be from incremental folks taking payments, which is good. And again, folks that say we don't opt into this and are taking the price increase. Again, we've just seen less-than-expected churn against that. So we feel good about the execution of the mandates that we've done to date, and it's certainly a strategy that we'll continue to use across the portfolio.

And I think because of the way it rolls out, you get them and say, yes, you sign them up, they transition to payments, they start processing as you go in through a base of thousands of customers, you'll start to see the benefit of that in 2024.

That makes sense. And is this something you can kind of roll out through the rest of the year kind of core business solutions? Or is this something more on a case by case basis.

Every solution is a little bit different, but there's -- we definitely are choosing the ones that we think have the greatest opportunity and the greatest upside. First, it's -- as you can imagine, you're potentially underwriting several thousand customers to get them on the payments. You want to be thoughtful about the rollout. So we will be doing these on a kind of a bespoke process, but we think we have several others that we could be doing the similar activities too as well.

Super helpful. Thanks for taking my question.

The next question comes from Aaron Kimson with JMP. Your line is open.

Hey, I know we're probably still two quarters away from an initial 2024 guide, but how do investors get comfortable with the organic revenue growth rate, ex price increases for '24 and beyond.

Well, if you look at kind of where we have obviously given the guidance here, but I think we're pretty comfortable with where we feel the second half of the year is going, and we're seeing positive trends on the way up from there. So I think when we look at some of the lagger dragging down on the business right now, some on the -- we talked about the fitness and we talked about marketing services. Fortunately, it's becoming less or part of business. I think we -- Marc talked about in his opening payments as a percentage of total revenue increased 300 basis points year-over-year, and we expect that to also continue to grow and look at the overall payments growth. And so the areas of business that are becoming the larger part of the business are the parts of the business that are just growing faster, full-stop. We expect to make continued to make investments in those and continue to make those a large part of the business. So as we look for the rest of the year with a lot of confidence, and then as you look at 2024, obviously, we'll wait until we see how the year goes from a macro standpoint, but we feel pretty confident in terms of our ability to continue to ramp our growth rates at and higher than current levels.

That's very helpful. Thank you. And then just stepping back, you asked the two-year market as a public company last month. The stock hasn't really worked in the $17 IPO price. So overall, you've executed pretty well, right? What do you say you think the one or two things, the street still falls to appreciate two years as a public company.

Yes, I think the people that are following us, I think, to appreciate it. I think we have other challenges that we're dealing with from a technical standpoint that really nothing with operations. I think we've done a really good job from an operational standpoint. But I think it still gets underappreciated the scale of the operations and the customer base that we're dealing with. We have over approximately 700,000 active customers utilizing our solutions as we talk about today. Over 160,000 have signed up for an onboard and for more than one of those solutions and our ability to continually sell more product and service into this very, very fertile based. It's extremely exciting. Matt touched upon the things we're doing in the payments perspective, not only is payments incredibly accretive from a growth and margin perspective. But it's incredibly accretive from a value perspective to our customer base as we begin to put more resources both internally and then outbound reaching these customers to get them utilizing the solutions more effectively from a payments perspective, the economic upside from that perspective is extremely, extremely high. And we're just -- we haven't really built that into our models as we're starting to see that come. But I don't think that's been appreciated externally from the Street perspective yet.

Awesome. Thank you.

The next question comes from Clarke Jeffries with Piper Sandler. Your line is open.

Hello. Thanks for taking the question. I wanted to ask about that disclosure around enabled and utilization in the customer base. Can you help us think through how those buckets work, how the enabled flows into the utilized? And maybe how much opportunity is left to add to that enabled bucket rather than the overall logos. I'm thinking of large systems of action that may not have that payments enablement or sort of add-on functionality to really offer that enablement to the customer.

Yes. Thanks, Clark. I'll start with just so we define it properly and then Matt can talk about the specifics. So the reason we opened that reason we kind of brought the statistic up because it really is a better leading indicator of how we're doing in terms of giving people when we say enabled -- you're right, enable is even higher. So we need to integrate the payment solutions into a software so they even have the opportunity to take it. And then we're actually talking about we enabled, they enable sign up and onboarded. So they've actually said, "Yes, I want it" and then that third statistic that we've been giving is the utilization. So with the statistic that we kind of brought up today that we're going to be giving going forward is that middle one. So they've been enabled in terms of the integration -- is now signed up and onboarded and we've yet to get them to fully utilize or have to utilize that particular month. Matt, want to talk some more statistics on that.

Yes. I think Eric makes a great point. We really think it's just a better leading indicator to where we are with multiproduct, ultimately getting to multiproduct utilization, empowering more of our customers' businesses with the integrated suite of solutions that we have. So again, as Eric talked about, obviously, getting people contract and onboarding for that second solution and then from a strategy perspective, ensuring that, like, again, thinking about the payments world where we've just done the most. First, we're focused on the go-to-market motions and marketing sales that's going to drive payment attachment. We talked about some of the strategic initiatives like mandating payments that's going to help us achieve that. We talked about adding outbound sales touches to complement product-led growth funnels and product messaging. Again, once that's enabled, really, we go to our next strategy efforts, which are focused much further down the customer engagement funnel. So driving them into for payments customer active processes expanding their wallet share initiatives like proactive customer success engagement via those outbound touches, adding more product real estate to the payment integration. And frankly, that could be adding more product real estate to any integration that's going to drive that multiproduct utilization. So again, really, that's how we think about it. Again, it's a -- these are numbers that we'll continue to publish going forward, but we think really the right indicators of where we are in that journey to multiproduct utilization.

Perfect. And just to clarify, is any part of it a discretionary choice of the customer? Or is it really just duration as they will move towards that utilizing bucket over time and it's more time dependent rather than discretionary. And just a separate question for Marc, you mentioned stabilization in marketing, any way you could further clarify whether stabilization means return to positive year-over-year growth or any way you could bracket subscription and transaction growth in the second half of the year, so we know the kind of balance between the segments in the second half.

Yes. The first part, Matt?

Yes, I can take the first part. [indiscernible] if you think about it from a customer engagement funnel and they're obviously making the choice within our go-to-market motions to engage with that second product again. So we'll use payments as that example. And of course, we've got to go through the process of getting them contracted onboarded and we're going to deploy a next set of strategy and resources behind that to turn that payment attached customer, that enables customer into a utilizing customer. So I wouldn't necessarily to us, that's not discretion. It's just the next step in that engagement.

How a couple of questions meant -- it's a proactive decision that they are making and 160,000 people have made that decision to do that. So it's not default number to be very clear. Our opportunity is to get those people who have made that decision to follow through that decision relatively utilize it. So it's good that they made the decision we've made it available. They've signed up and now we want them to utilize it.

Yeah, it's not a default, that's not to scratch it is their discussion. They made the choice that they wanted that it integrates.

We watched this before. It's almost illogical to not utilize it in some scenarios just in some of the workflows that we have and they just be dealing with small businesses, and they're busy, and a lot of things going on, and it's inertia more than anything else. And so we feel very strongly that we have the opportunity to continue to penetrate the base of customers we have at a much higher level. And we've made really good progress, a lot of progress to come. Marc, on the second part of the question.

Yes. I think on the second part, look, we don't break out revenue guidance in the pieces. When we say stabilized, I think you should take that. What we've seen in the last couple of quarters is consistent with what we expect to see in the second half, and that's all baked into our guidance going forward. I would just sort of leave it at that.

All right. Thank you for all the clarification.

The next question comes from Jeremy Sahler with Jefferies. Your line is open.

This is Jeremy on for so Monta [ph]. Thanks for taking my question. So I guess, first one is kind of a two-parter. I guess, as you continue to drive attachment of embedded payments, it's kind of hard to parse out the seasonality. Can you maybe kind of give us some color into what the seasonality of TPV is in a steady-state environment. And then also, you mentioned that take rate expansion again. I guess, what levers are you pulling to drive that rate expansion and kind of how much more is it to go there?

Yes. I think we can talk to the first part seasonality, I think we've described it across the business. And specifically, if you think about the largest part of our TPV being in home services, Q4 and Q1 would represent the lower end of seasonality. There's also some just calendaring in Q4 across the whole payments landscape. When you think about November and December and shorter business days, that plays into it. So we typically think about Q4 and Q1 as the lower end from a seasonality perspective when it comes to payments in Q2 and Q3 and specifically in home services where there is a lot more activity we typically see the higher end of TPV from a seasonality perspective there. The second question, I believe, was about take rate and things that we can continue to do expand that obviously. We're happy about the expansion of take rate over the last 18 months. I think we talked about this last quarter. There is a variety of things that we do from pricing and packaging. Some of it is, frankly, just mix of our payment space as well as we are driving more and more attachment and utilization in some of our higher take rate solutions, specifically in home services, we have seen take rate expansion just in aggregate go up. But obviously, from our end, we have opportunities to, A, just grow the expanse of payment capabilities within our integrated systems of action allows us to continue to obviously add more value to the end customer, but also commensurate price to value from that perspective. And then lastly, we continue to have opportunities with our end providers for -- as we continue to scale, creating scale and the economic relationship from a take rate standpoint in those contractual arrangements.

Got it. That's useful color. The rest of mine were asked. Thanks for taking my questions.

The next question comes from Dan Bergstrom with RBC Capital. Your line is open.

It's Dan Bergstrom for Matt. Thanks for taking our questions. Ever Health, it's been a couple of quarters now with the rebrand. I know we're early in a long process here, but anything to point out around initial customer reception to the changes? Is it accelerating customer adoption?

It's been extremely positive. The Ever Health brand has kind of been soft launched as kind of an overhead brand for the kind of our health group within the organization, it will be really officially launched really in Q1, end of Q1 of next year as we're going to really go to market really with one brand. And consolidate all the other branding parts of it. And I think we'll start seeing even more efficiencies both in the operations and even hopefully an increased upsell on the selling part of it as well. To date, the response has been very positive. We've been selling these solutions again, under one organization. So we're going to make a very simple upsell, cross-sell, full-service suite solutions to our customers, which they genuinely appreciate versus in to connect the dots themselves and other partners where they have gain point solutions versus one whole solution. So the Early feedback is positive. We've seen consistent growth in that category. I think when we launch it fully next year, I think it will be an uptick of fully in growth, but definitely in minimum and operational efficacy and efficiency that we'll get in the organization. Matt, do you want to add?

Yes. I think it played out the way we had expected it to. From an external standpoint to Eric's point, the reception has been really, really positive. And from an internal standpoint and ultimately to a customer-facing standpoint, it really has set us up for that multiproduct sales. So think about EMRPM as the base system of action, but having those active integrations for integrated insurance clearinghouse and claims integrated patient pay and now integrated customer patient engagement solutions really becoming more active in those EMRPMs. It is exactly what our customers want. They don't want multiple. They don't want multiple providers and us being able to drive that to market more and more and more over time. Again, that's part of the receptivity that we've gotten from our end customers. So excited about where we are. And to Eric's point, there's a lot more progress to come over the next year.

That's great. Appreciate the color. Thanks.

[Operator Instructions] The next question comes from Eamonn Coghlan [ph] with Barclays. Your line is open.

This is Eamonn Coghlan [ph] on for Ryan MacWilliams from Barclays. Can you just broadly describe how SMB has fared in 2Q? And what management is factoring in for '23 guidance in terms of macro? Thanks.

Yes. Thank you for the question. I think everything -- we can only speak to the SMBs and the verticals that we serve and the verticals that serve are pretty resilient. If you think about the healthcare customers we serve and the home service customers these services represent the vast majority of our customers. They've been very resilient, and we've seen no degradation in both growth and pipeline within the customers that we serve, and we're expecting kind of a similar trajectory in the second half of the year. So not necessarily increased or decreased, but really along the same line as you can see for the last couple of quarters.

At this time, I'm not showing any further questions. I would now like to turn the call back to Eric Remer for closing remarks.

Thank you very much. Well, EverCommerce had another consistent quarter of exceeding expectations. The market and the opportunity for our software and solutions continue to grow and remain extremely excited by our unique position in the marketplace to capitalize that opportunity. We appreciate you all joining the call today and we will speak to you next quarter.