ESMT - Earnings call transcript Q3 2021

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Operator

Hello, everyone, and welcome to the EngageSmart Q3 2021 Earnings Call. My name is Daisy, and I will be the operator for today's call. [Operator Instructions]. I will now hand over to your host, Josh Schmidt, from EngageSmart to begin.

So Josh, please go ahead.

Josh Schmidt

afternoon. good and you, Thank With me Officer; Bennett, Executive are today's Cassandra Hudson, call and Bob Chief Chief on Financial Officer.

XXXX X-K at Our and quarter earnings and release third supplemental associated Form can investors.engagesmart.com. found be press presentation

During forward-looking Actual from could information. certain results we this by differ these will call, contemplated discussing forward-looking be those statements. materially

more the report with refer nearest information risk press and for our SEC our call Factors be section of investors.engagesmart.com. Risk also over to both be being certain Investor discussing the website. to in This regarding can Bennett. other now call on risks will the factors our to A and the non-GAAP live our on on supplemental to of I on available quarterly Relations these release We filings be and the found would XX-Q and will non-GAAP like metrics is metric for section financial our measures. of earnings Please statements at reconciliation presentation, Form of website GAAP webcast replay forward-looking available which business. associated Bob are turn

Robert Bennett

and thank first as compelled joining humbled date. public us. you In quarter the the truly feel the this, our to have mission company, our I source out am to our achieved of for success customers, to a their can point engagement of everyone, we and Welcome, success partners attributed I on Delivering our directly of simplifying client contributions. customer be and employees, and by

because that on markets. shouldn't background results, and into bills, I'd jump a thought We activities EngageSmart's hard. little be going paying in we appointments third paperless position quarter our scheduling like I Before our founded EngageSmart provide

to software out easy-to-use set client and simplifies that interactions. we self-service customer digital So create

is engagement their size payments enterprise-sized increasingly and services, software electronic underpenetrated driving to of Customers at $XX These payment clients to revenue simplify processes. and digital these adoption tailored encompassing care indication dynamics. Our strong our for organizations EngageSmart reception vision. wellness, with addresses adopting capabilities and utilities, huge engagement markets They legacy financial customers billion, and and market an the integrated mired target growth are our customer with medium and self-service. tailored small, serve are market customer manual vertically count the giving. with strong growth in with customer businesses. verticals by engagement government, modern health We systems and of and software their noncyclical are a and

which need solutions. to Those prospects by The software each. represent are For demand us, our than and represented efficiently SMB billing, with The notes, performance end scheduling, of and refer our that X solutions and as our Enterprise. Enterprise and by organizations, and revenue large user segments the to SimplePractice growing of such Most powered of our solutions health space HealthPayXX which manage more similar giving. SMB revenue while go-to-market streams and influencers, anchored as also our they for software programs our is is our larger and work modern as annualized InvoiceCloud Enterprise the midsized and $XXX we an segment of In and segments DonorDrive is marketing SMB; white primarily we with solution exciting payment our in and small subscription-based, We group refer and segment SMB for solution million transaction-based segment, communicating businesses, adjacencies. back-office some segment helps comprises compliance segment strategy collections. is Enterprise customer-facing care is vertical revenue. for by into

recommendations website from trusted themselves they word-of-mouth as is via our our also go-to-market prospects Importantly, powered peers. by visit

volume, sales, partnerships simplifying in of growth revenue revenue Enterprise our accelerate client XXX,XXX clinicians SMB additions continued now deliver segment like in both from segment, than customers speech-language had of consumer for an www.simplepractice.com. our roots have the our integrations high physical free of solid customer These new SimplePractice, SimplePractice $XX.X us, as more With fast in acquisition They our occupational important system Enterprise at the among In solution. business, behavioral segments high that million. more business, We SMB where SMB high and than EngageSmart serves business we direct I'd are customer X,XXX delivered trials motion. XX% therapists, using more than nutritionists, by have solution record approximately offered revenue coming has now in our are subscription and SimplePractice engagement engines Beginning therapists, components the a others. and management selling segment. retention. in new which with growth pathologists, for in to and rock long-term its segment. the at of performance XX% turn increase We growth highlighted and overview our health, markets transaction third to net practice conversions now quarter. its growth revenue chiropractors to through

including easy-to-view those SaaS embedded true tracking. a enhanced In income the advances continually As signatures solution, for functions, advances, telehealth clients solution. SimplePractice QX, and enhanced

quarter, is and XX fuel in As wellness to SimplePractice map has growth. specialties road product this a of solid

to InvoiceCloud clinicians quarter. Enterprise, wellness in patients. and selling We their was Oracle across continued setting strategic the for In implementation the our clients enterprise the in digital are X spectrum standard the an by referring One signed simplified an showed integrator. existing accelerating SAP help alliances enterprise-level strength leadership their for solutions. We systems integrator product and one of engagement and alliances. and drive with These growth with was

long-standing partnership partner. also payment our their and We presentment now bill with preferred are electronic and Group Harris Utility strengthened

pay Continuing National a beginning the use pay and help with we their bill Fuel, services further environment integrating use revenue digital with nonprofit X. check, DonorDrive methods events phone, effective highly role. is recurring to segment, transaction PayPal. prominent as new SAP notable giving by day virtual seen pay launches events monthly charity online such in-person, a event drive such banking by The and dramatic and an with Such to has our National ability the to Enterprise from our difficult revenue marketplace new generation for has our this receive launch Additionally, had our customer and corporate Sclerosis shift increasingly streaming at customers as and preferred mobile-friendly from to as Multiple software Make-A-Wish expectations enabled immediate customers Society peer-to-peer value fundraising solution. exceed environment. Foundation DonorDrive in such Nonprofits playing virtual the this giving pay,

efficient bill proven reduce the bill given their to text key online, market are ways than payments pay prefer drivers more organic software on I'd forward, and survey conducted in drive superior bills growth late engagement to to we acquire increasingly mobile, for to if through each customer becoming of recruitment, in and drivers, driving all provide our loss the maps aware Payment Cassandra? within increase and drive payers on flywheel: highly and product turn verticals of where leadership via help providing is that focus it all or vertical vast. growth. phone, Online which maintain growth talent to InvoiceCloud, road domain strategic talent develop to knowledge With According customer begins option. pay that, to Looking to like across deployed is and direct rooted And or strategic go-to-market customer State they're remains multiple success the overall. solutions. by of our form XXXX our the CFO, Cassandra X our is with And these expertise online DNA. pay organizations industry-specific of our strong call Hudson. has and our that We strong satisfaction retain deep strategy our a to and are Talent our to with over brings see customers XX%

Cassandra Hudson

all first and earnings Bob, you today with for you, call us and our the thank analyst joining Thank investors community. for

our quarter, Before to financial would the model everyone our I to new recap the EngageSmart highlights story. financial for reviewing like for quickly

time revenues Our manner adoption. our XX% solutions of to revenue. typically a leverage revenue marked as customers, to and in nature, and additional revenue aligned usage-based digital offerings to and add-on we We transaction visible in customers is XX% expansion see that highly price by our an and success are subscription the elect increased purchase over our payment recurring drive in solutions and

being typical their our practice, in the the subscription leadership a case, as add driven to processing to from services. practice trial is SMB and monthly That then wellness we free additional buys the continue expand trend capabilities solution for expect converts a management the and SMB, clinicians and of in and licenses revenue majority telehealth our our we customer products position For payment fees, subscription such vertical. this as by

facilitation usage-based of of revenue is For from our from Enterprise, majority fees processing. the payment transaction the and derived

in results customers typically for transactions recurring us. and and a revenue visible process which invoice stream durable Our highly themselves payment enterprise

needs. percentage of SMB Enterprise fee customized of charge net of In north a revenue customer cases, between some volume even segment split a revenue per based retention Our with mix Today, pricing our roughly or the is is on we strong and as XX-XX transaction, both. individual some a XXX%.

our of is for consumers also claims clinicians. drive additional digital to to including telehealth continued revenue add-on the benefits processing, retention insurance Our of products, a ability adopt continue payments. adoption result licenses retention to from SMB and

that revenue third million year-over-year to be go-to-market increase quarter LTV is by background, XX% to solutions. best-in-class by million fueled business Consolidated strategy. the fueled $XX.X revenue $XXX of QX returns are tailored elevating our to to million, our continued and across from $XXX efficient vertically Our our results We that that within further delivered representing growth QX segments in quarter. by CAC on strong rapid both characterized QX. and an in was With annualized

approximately this has total year-over-year a XX,XXX XX,XXX base Our customer customer is increased by a growing of basis, On our total growth. to customers. driver count core

as expansion. our on, trend continued product offerings expansion vertical We this success in fueled to of as markets, carry new core our well by our expect

solutions Given our growth by XX% usage in in in in the compared total QX solutions, that saw the processed number XXXX. is based, a growth. transaction processed nearly growth XX% XXXX million transactions of XX.X our number and key continued revenue We revenue transactions with of QX by $XX.X year-over-year to driver million of rate our is another of transactions

business the segments. to Turning

improved $XX.X top are driven two, continued coming of telehealth and processing, add-on licenses customer additional in Our clinicians XX%. SMB for customer million, reflecting segment services, growth expansion adds; our and continued one, growth churn in: three, year-over-year was as existing to with within utilized. deliver new including rates; strength customers outsized line at by continued This revenue payment our primarily

on reflects from Our by existing Enterprise reported of and This to in customers. customers million consolidated XX%, our strong revenue. also that solutions growth growth by live went continued QX year-over-year driven new primarily XXXX results our segment also $XX.X contributed and

XX.X% last margins to at Our The XX.X% back-end to for adjusted our the gross XXXX from primary provider. business to to contributor year. was continue stable change QX be telehealth QX compared margin across new entire the migration a XXXX

it our this While change growth retention. revenue, quality an offering telehealth in resulted in strong to our cost resulted subscription continued the as of telehealth materially improved and additional well increase customer has as of

expect clinicians as utilize in-person that normalize continue model, us telehealth telehealth to costs hybrid improve long and over will to term. enabling We the overall a margins

customer revenue Our includes of cost hosting, costs, segment. new the within and all support for solutions cost our software, of for for customers bringing live direct implementation Enterprise product

small customer retention and customer sales with new both we continue invest $XX and in million activities, programs. year-over-year acquisition of as and are customer cross-sell sales with expenses our Our marketing marketing new segments. of driving upsell, Most aggressively expenses driving million $X.X on a adoption costs increased to associated across including focused driving amount acquisition to

We investing increase term terms a expect as as near and dollars of our in of continue to for sales and percentage marketing revenue growth. expenses in we the absolute

end new of $X.X costs Our well as R&D million ease P&L as headcount-related expenses. of as use products of not improvements QX and these Total on year-over-year Costs solutions. a and was capitalized R&D consist associated headcount. product at product sheet included $X.X increased of expenses functionality associated enhancing $X.X with expenses with our significant the the primarily incremental maintaining result million. of net engineering to existing balance development million, amortized primarily to and new the or the offer in into are capitalized

innovating all of We to for continue especially products and leadership solutions, rapidly increasing investment on solutions. expect in we our in SMB, out to new where our R&D consistently our rolling are maintain product

support our to Our increase primarily an in a XXXX QX is public due G&A $X.X million $X.X increase million. cost to to from to This headcount increased transition company.

decrease costs operating as We expect revenue G&A a after public percentage fully costs. of to company absorbing

product Our quarter net $X.X associated sales company. $X.X transition development to the investments and compared loss costs with a third a for public of loss reflecting to increased million the in million XXXX, spend and of to net marketing

or million to for in EBITDA $X.X was representing quarter compared the XX.X% of margin margin adjusted million third the quarter, XXXX. $X.X Our XX.X%

improvement our to in in temporary driven XXXX, growth During a a we as revenue by profitability, well meaningful experienced COVID. strong spending as slowdown SMB due

since ramped in heavily development investing see drive our we and the opportunities and growth. revenue marketing have given and We are up investment the spend, to sales in marketplace product

hire pace company approximately expected a in XXXX XXX into across normalize and will that investments these drive on XXXX. to are the We to carryover employees impact XXXX into are

at XX.X XXXX, shares stock the raised sold of per we the XXXX, discounts, in This included of of respect we XXXX, which We the deducting million price full the public to initial at equivalents, $XX underwriters. commissions shares cash costs. to we our a stock With issued to On and QX our by common offering Moving exercise of received capital underwriting had proceeds completed after $XXX.X offering in overallotment balance $XX.X common and from XXX,XXX option as million of million the XX, in IPO offering. and net sheet. cash share. $XXX.X in pursuant million issued end public up capitalization our of reflecting September from December

also repay We utilized our million debt. $XXX.X to fully

September our current million financial Based results providing outstanding. XXX.X we our we shares macroeconomic for and had As of issued to on guidance and following performance regarding trends, the financial date XX, XXXX. are and XXXX,

$XXX.X the $XXX.X in or for million to our growth year-over-year. of million to XX% range be the XX% and raising are XXXX We year guidance revenue full

COVID As demand during of with from second a benefit and we high the reminder, XXXX wellness digital transactions. practitioners did half for

acquisition within our Our and all key growth drivers adoption base will continued continue customer growth across solutions. customer expanding to new be

margin million represents Our in is $XX.X which year an XX.X% adjusted $XX of million, full the EBITDA to be expected EBITDA for of XX.X%. to range XXXX the to adjusted

previously As public a company. EBITDA adjusted mentioned, transitioning to costs includes our associated with

our about Looking ahead, are we durability. excited incredible revenue

and customer and XXX% turn now on growth have back growth than I'll for the call noncyclical the better vertical clear over to future. to dynamics opportunity closing a diversity Bob retention back revenue with We of revenue comments. the drive in net

Robert Bennett

EngageSmart's groups aligned highly simple who first. EngageSmart all Cassandra. driven will Thank We be success X best customer-focused people to our of our and our the customer you, Companies repeatable first, continue solutions. playbook are for with by factors: A by players. proven create simply of set players driven practices has priorities A

This are every customers. to leadership retaining, We in commitment committed our developing growing and is of at level of the organization. service

as leadership, by product Second, adoption. measured

drive bar work and Our model. with They long-term accelerates to organic who commitment measured as EngageSmart. don't best-in-class levels to our true That's high and to powers SaaS customer developing partnerships front want our in Customers changes. make keeps solutions This them adoption. regularly by sets want commitment enhancing customers, strong system with growth. satisfaction someone the enables high our go-to-market and

market our domestic integrated engagement billion. $XX and The payments is Third, addressable digital for total our large runway. customer and market self-service

market summary, very here solutions early of captured in And X% less and are excited in future. all are best of the than we we have SaaS share. have very about verticals. our We In the innings

focused learn We our world. customers, delighting positive you shareholder to value and more. the our this are on creating business us while impact growing call joining in making We on appreciate a

Operator

[Operator Instructions].

Goldman from comes Sachs. from Our Will Nance first question

will We second move our on question. to

question second Auty comes Our JPMorgan. Sterling from from

Maya Kilcullen

Sterling. for on Maya It's

SMB between SMB is really on So then how subscription there. affecting side? the talk you revenue transaction this revenue? and drivers bit of little mix just total about your shift the XX% a it split revenue, more And just over growth Can strong grew to the

Cassandra Hudson

Sure.

shift. first, of subscription your between talking transaction question of wholesale and guess, a taking think, split more the stable, been and the I think, not time, has points, revenues revenue shift being subscription-based latter little but over a we're subscription, will towards XX% It pretty a with bit XX% based. part I I transaction couple

of revenue. drivers, customer of is growth see of in business. great and expansion we strong we as the mentioned, shift to In really And overall I That XX% terms across SMB total continue. expect trend that SMB continue our a the the ARPU adds hitting to net

continue to several profile SMB next business. take over we more up revenue to years of the of the expect based growth on So total the our

Maya Kilcullen

a And then Great. Okay. just follow-up. as

quarter? from transaction growth in driven mostly existing the what's So new customers? volume in acquisitions that Was or increase the volume from customer transaction

Cassandra Hudson

then customer on Just that's conversely given our the it's I installed to base, would large existing customers. fueling driven And new subscription the by going adds, really say really be growth.

Operator

question from Truist Tillman comes from next Our Securities. Terry

Terrell Tillman

we Cassandra, on congratulations the -- actual results. congratulations and for the up literally XQ, Bob you the then following [indiscernible] the should couple revenue had just and the to on the like plug subscription processing and to XX% I IPO. will and/or the question. And then just we and first, secondly, I in get numbers should a questions? XX% on of Cassandra, last mean

Cassandra Hudson

Terry, Thanks, thanks and the for congratulations. and joining Sure.

trends now, on For stable are the XX-XX. those

kind think of of be and need to So get on I should subscription you where you that in terms breakout. the transaction to

Terrell Tillman

when term been earlier, had impressive about of are health you they think, growth, What or I'm back on? a parallels maybe health. how seeing just I those And part observations understand or of of follow-up. that, strategy, SimplePractice, near lot -- kind talking in the mental that to on trying I seal kind with to so maybe And first know were behavioral the the of versus adjacencies? a you a substantial there. out, and these near-actionable do where brought kind just of you core pathology. speech And business when and Bob that mental call adjacencies I -- did like you adjacencies, really Okay. that's is near oncology, of health any

Robert Bennett

have being this of Terry, Yes, hear voice. in it's was became health the rate non-mental back part that then. clinicians XXXX, had we customers Thanks as on. March we did with that the almost essentially your in EngageSmart, literally SimplePractice to many Good XXXX using mental for of entirely were of health as Bob. growth we same when Today, that solution. back March it

or So so so are including therapists, X there's dietitians, outsized new high growth, with that occupational we markets, $XXX $XXX very another translated about that looks chiropractors, in very in back in ARR speech therapists, well, ARR pathologists, our of -- million XXXX nutritionists, driving to over million what and XX X forth, -- language years. had to similar we physical other -- from into of million $X that growth have went

very the about the we're new we're So can playbook. playbook the that in, better first second we we ran run markets excited Hopefully, time than we time. the and it have the

we're trajectory but your for that's sure answers I confident not if that So my I'm our in try. growth markets. new question, think those

Terrell Tillman

definitely definitely It does. does. Yes, Yes. it

clarification. So statement more first I my of felt like a just was

Enterprise feel frame I SAP? of question, going new nice can relates I'm integrator you the way and to promise -- on the that's to ask opportunity system well you Any as become like me. next But stop it's can I'll partners sort to just just more actionable quickly about side, So InvoiceCloud. question more or hear on could as the hang then particularly around one I that and up it with Oracle-based how

Robert Bennett

solutions. Sure. implemented on we've They're new actionable actually -- already actually those those clients that implemented because we've

go and SAP, out of and certain other integrated version a us as with find we once enterprise it's Oracle style larger clients. a -- opportunity rinse-and-repeat So or for we've

larger to So through for attaining revenue in per client this Enterprise higher InvoiceCloud upmarket is a primarily move deals. drive

to we'll partnerships, aggressive to forward farming and on hunting done. yes, and And partner be are our continue base. about march both So new continue finding with we those

Operator

Nance the Will from on Sachs back have line. now Goldman We

William Nance

Great.

a me think on customer the you in the environment tailwinds I on. I me, pandemic, Sorry letting I but I the on happened. But side? talk what don't that about Nice Can the lot maybe of guys results. business. know think I wasn't that. back appreciate telehealth about acquisition drove SimplePractice during

of bit I feel does other it IPO As of funnel, on of kind talked we we you the kind know how early trials. that there? little the Any a acquisition of And success kind really of get kind of during out side, for broadening customer these growth? out? broader audience signs about on Any elevated sustain the color like levels free can that's the playing

Cassandra Hudson

remarkably Sure. trials your surge see early a pandemic, XXXX, Later would ultimately Sure. in I terms and in those very we of To converted since of say, did demand the saw trends to line, been Will, in in part point, in then. that stabilize, the customers. we they've

have trials new your wellness decrease. been where after verticals investing not these to going And We've we've been growth. We seeing them. as point, we're well behind strong really seen

trials encouraged been it, the pandemic. So I and and performance think by now, conversion post that ultimate the we've to the call we're generate XX very able months

William Nance

line kind great. maybe then sounds that of look new maybe how the and side That of know you I you business kind the to business that's growth like pretty revenue Can And revenue to it. about what speak sight the over the for a are that, with switching exiting business. of the Got given And feeling Enterprise client good gears in trajectory year? of just adds? visibility, pipelines visibility.

Robert Bennett

over funnel brought of the as it's Yes, alliances of lot Bob. Enterprise top past in new pipeline, we where Will, for months team. that alliance on built we XX actually quite robust a is us The the up

and of to and in with our invest most directly on of customer business find, alliances people talent funnel the the driven continue integrate where great to more sign system. we continue partnerships information bringing top leverage in strength side to because to by is We first, the drive

proven of think strong and at the processes funnel the the I inventory top the that to to continue So got we've factory. push through inventory

Operator

& Needham question next Scott Co. comes from from Our Berg

Scott Berg

the if guess different in than maybe about How bit how the of two here, to on we'll didn't the know you're I Cassandra on investments segments, growth other. a trying more out think segment, just the congrats the split quarter those start between we SMB her little pre-scripted should kind are and strong one that lean I first Enterprises? the two Cassandra, in remarks. with here. and Bob discussed

Cassandra Hudson

question, investing the on with deploying the side Sure. for for thanks certainly prior years. spend are heavily Scott, joining we SMB today. us this thanks We're than year And marketing very the product. and definitely more respect in to

are a more bit SMB I we rotating the So probably little would of business. side say the towards

our there As investments with partnerships Enterprise primarily also in earlier. sales area in headcount are it relates that and to go-to-market Enterprise, the mentioned investing the Bob

Scott Berg

of follow-up side Great. then it those payments a in customers, of transaction companies for Enterprise I has your InvoiceCloud processing, exposure a that I've coverage to on little And or historically, Helpful. recovered other of segment, payment the my before been environment think? the seen from perspective, maybe government infrastructures. types really know any are especially bit of depressed, least pandemic to at have transaction in How we much in in what from of Kind do a quarter where quarter. we second obviously off, lows was getting the sort the the the of have first in solid normalizing kind XXXX you

Cassandra Hudson

during from benefited certainly and focus on we payments in that COVID. think payments digital happened contactless I mean the XXXX I Thanks.

we as you much think don't definitely really strength will. seen business. there, our if in I of good So saw We've a depression

are gov especially growth Enterprise seeing things customers a the of in now, from new And coming revenue coming think lot business. normalizing our we're of I online. segment

Operator

William question from next with Our Blair. Napoli is Bob

Robert Napoli

public and company. start let congratulations, And Bob to me as nice Appreciate it. my Cassandra, a a Good see. and add

good to you. So I to guess talk --

i.e., is but mean, in too ratio I there even SMB, would? to up those the ratios is growth are high? especially that slightly? opportunity Your particularly have and accelerate LTV think not by you're to ramping growth down thought, Or as further that bringing a you CAC if business, I ratios of been impressive

Cassandra Hudson

with thought. I is are Yes, that quite And a are ratios an in, guess, high. enviable we position right, are Yes. you certainly that LTV-CAC

So first we in particular slightly in start a to QX in investing trend you will we'll in to we we're this were see as the take as SMB. -- you aggressively And to the LTV and be in in we acquisition down investments see with XXXX continue year. result those well to are beyond new respect where in of half that terms rate investing CAC. more customer where going QX of And

Robert Napoli

obviously, verticals, DonorDrive And the mean to And increase the think, you where if best the trends see cover if new well. would you in InvoiceCloud, Enterprise, mean, I I do then where invest opportunities be would, or you but within helpful even HealthPay, SMB, investment? do see on, to as I you

Cassandra Hudson

-- yes, Enterprise Enterprise, in side. the on sales Enterprise in it's really Sure,

toe on I really consumer just water we're dipping the and insurance. think our in finance

So those invest growth good future. the are color opportunities to to any for Bob, there? us add in you'd drive

Robert Bennett

mean we the marketplace one true the another the to oriented of one in having is solutions X is Yes. I of vertically benefits, SaaS course, a down, when have that be of diversity little might up. -- one

that's to we we want driving ultimately, outsized Of course, And get intend be growth. them all where to them all.

still from pivoted a our was has charity a customers a the And would The the to find had while COVID feet HealthPayXX, with peer-to-peer. be fairly had still you investment is get bringing rebounded they attention We -- lot made the a to events. been to because nicely Enterprise care to many street. they're in have care but had it because little I in focused with more in those because they're need already drive agree to largely in pandemic. Cassandra we InvoiceCloud over the bit go-to-market we're health That bit facilities XXXX, that health dealing investments products, of a have shortly. hard Enterprise headwind, going with patient the be of we to post-pandemic solution bit as of with going DonorDrive back in we obviously hope know, a -- to of on times, is themselves which

we need inventory to we're excited more really soldiers get it. prospects that after to of We and strong floor have bring a get to to the after,

Robert Napoli

the just and your be your in balance your around good. But strong you M&A my you've question. is important M&A M&A? pretty And acquisition how And what was the last if here? then from would done past, strategy With some so, looking? sheet, Are SMB actively

Robert Bennett

Bob. Yes,

us. to It important be I think, to us. very M&A, So will is important continue to

investing growth growth So near acquisitive but move in we to to with term there, forward. are our for we inward blend be inorganic announce intend the sure, and we have organic nothing as

constantly We're talent bringing here. active some looking. we're So together and We're optimistic.

Cassandra Hudson

guess add, just our right on story I of very organic I strategy. And growth would on currently, now, kind executing focused and we're

Operator

Our next from James. Raymond from Davis comes question John

John Davis

rev that your comments both? I that remarks, regards retention the Cassandra, curious net in And the SMB, year? then Enterprise is or was I bump and we called or is how trending either And you retention on COVID in of as Just some in how out prepared to we're lapping just of that's back half net to trending color rates. go or got SMB now year. maybe you peak kind churn last improved this think curious, the that revenue specific

Cassandra Hudson

Sure, the John. question. Thanks for

On a impressed having my really been driven react really And were have and so product. the by respect telehealth result. with rates breadth certainly very with solutions seen customers we've well customer to that's embedded we've the incredibly regarding customer the SMB, where churn comments -- our retention seen really and strong of our as retention. And in

range SMB last a to we point, side it surge relates net As to. we retention into your normalizing XXX% revenue as saw revenue expected Things are in the them on year. the retention, net to

John Davis

on about year, a maybe to can a balancing think Bob, back will about guide goes we as if And But do guidance guys just time. Just something any the Great. upside bit bottom go and growth XQ But to that kind think this EBITDA. the perspective margin. to the you we Is of implies Obviously, fall the flow for expect little beyond. in a think kind on Or then next curious had single-digit the that not we 'XX profitability the high you to is how into margin. through upside? how do reinvest Obviously, you to margin potential business? I Okay. just looking EBITDA of something, or through of think think line? kind and quarter, you about we nice

Robert Bennett

question, Thanks for the John.

sure, and it. that for through priority, in driving Our organic growth investment is

into drive growth make both plow not every to again, guidance would, on expect but I I any us So it, in attempt EBITDA providing would segments. that to

Operator

next Bank. comes Bhavin Our from from question Shah Deutsche

Bhavin Shah

for start off to company. great a Hats team the public being to a

markets, just capabilities go-to-market, those SimplePractice, perspective, there? guys just on you accelerate for the the sense growth have I core like there. to adjacent do these health it's from first mean From looking markets see believe place And nice guys right to free-to-paid product growth in the conversion you to a a at then Just any product really compared adjacent to market? behavioral have

Robert Bennett

Thanks, again. and your voice hear to Bhavin, good

forth so there's from a of add-ons wellness lots we've claims insurance with may -- mental is documentation There that And to an functionality invested are therapist beginning move years, notes other them who in -- we bring time, markets we're need of the through most solution a enormous for we that in and can That and of sort always are that of you learning quickly, -- of applicable the I health we things mentioned nuances fairly to SimplePractice has the of forward. we've notes. move the significantly still -- very each SimplePractice from did a the markets. we the has gained as nuances earlier, as a it's and is I -- a But So behavioral said, we in other the note verticals might and each past the telehealth, amount that of Those we there. lot it are wellness active. the quite solution, table health, handling we're there as different and one lot we including different professional mean perfect over where ever of method a than them, a perfect as continue bring others such if a to that while effort of have fit a perfect. and to X.X X gain making have physical fit, things. plenty it consider if traction the of that to into we is work thing to of few in of road advanced map not yet but way already We

Bhavin Shah

pipeline guys partnership financial Got et how presence is it. how for have the That's a pipeline is services, side. mean in shaping cetera? maybe just -- And you then up But to strong it I utilities. market very pipeline just particularly insurance, the perspective, flipping progressing historically had the And both government here? helpful. from Enterprise and

Robert Bennett

-- signed sure previous is, business question. an and with this partnerships. actually announced insurance which largest very a the We That's was adding strong excellent Guidewire, the actually partnership or not core country. the successful it have I'm We quarter the in if been believe, quarter, I provider services in

prospects quite and So of it active stoked the that side are on about extremely signing. with already other and alliance

services on of fringe there, optimistic there. very early the Still got the growth beyond but well lunatic we've here, side. customers innings high So financial hundreds

Bhavin Shah

If I hear. one in Cassandra. just sneak for to Great could

progress that Just as XQ SMB Enterprise the any into about and head for just and we segment? just we forward, should going think seasonality

Cassandra Hudson

On no, the whole, say, huge. nothing there's would I

relates tend to bill lot the seasonality customers. there is to a of quarter it invoice bit fourth and of tax with their where little billers respect Enterprise, to a As our

see heavier pretty there. the quarters. on between quarters is basis But stable a sequential do a So we otherwise, revenue revenue

Operator

Our next Citi. question is from Ashwin from Shirvaikar

Ashwin Shirvaikar

My on Bob, anything the know quarter. to always into December with XXXX that heading now, about or regards investors setup, outlook just Cassandra, right such. is setup providing necessarily start and not the thinking like question congratulations but an the you're first I

need -- monarch? large regards we be out So client investors. we to, we pointers initiative, answer the preference with the to help as on with watch any needs that Enterprise if Is particularly schedule on any for, in be? side, for should may that to out said regards Anything that watching to to there's plans with pricing case

Cassandra Hudson

We're to strong or segment. I particular focus any worried wouldn't about No, one point, on in expecting your February give that I thing on there's mean that say more we're our 'XX. continue. to detailed we'll growth in we and should either formal guidance

to across are customer our both drivers to adoption new digital growth and payment Our acquisition expect base, continue. really drive continuing we and those trends customer entire

Ashwin Shirvaikar

year-over-year. But [indiscernible]. is That's this more Understood. last current is catch-up there cost I should one at that? had as kind there? Or help Enterprise, lower is because looking forward? on obviously, carry a for segment information, some that you of we margin was Any down year, built year-over-year. EBITDA EBITDA down normalized in is your And level, EBITDA margin

Cassandra Hudson

exactly Yes. picking you're right on up the Yes, thing. no,

we pause in spending in temporary So a standpoint, comparison from had XXXX. a

expect level investing to So in continue, this not that aggressively and is segments year both is that very should terms not EBITDA across we've of that of been -- something we hiring.

I think our headcount on is year-over-year XX% up basis. a over

EBITDA in that anticipate today of margins So normalized continue? a more that are the to you should see you Enterprise level

Operator

from is Beck Capital. Josh KeyBanc question next Our from

Madison Schrage

wanted available greater digital Josh. quarter. types a I to on ask was This of of in congrats again, penetration I payment all wondering seen wallets and drive Once digital just Venmo that saw you your is if these And for verticals? wallets the if Maddie PayPal across bit. your I are out on called and remarks. these you've

Robert Bennett

Thanks for Yes. the question. Right.

offering these. are We

see, you're helps, added uptick. payment increase -- a got -- when of are We about We've seen And that. due at we we've say, little talking transactions. point, hundred. I would PayPal a bit right, but But this to of customers adoption increase, to only not we've couple small a hundreds marginal in material every

Madison Schrage

characterize business. I Super then you pipeline InvoiceCloud the was for if helpful. just your you're that follow-up, seeing could sales for And my wondering

Robert Bennett

Right. been partnerships, largely through driven side. we've in partnership is very active the and And InvoiceCloud

growth, and is to I as exceptional So EngageSmart started in which mean, winning of we drive beginning hiring but we our expecting that year. continue top-of-funnel this for and XX%, war substantial, adding Cassandra of feel the aggressively around is XXXX. -- we're I -- north to inventory we We to the -- add have, mentioned, employees to think, XXX in we're with about hire talent pretty year like we're on XXX here

processes XX% that in long-term And believe place. we in investing what growth that's So growth. close we're We headcount. We're to doing. for have the

more well And drive looking got. sales just put that we're have street the we've engine to to to on the inventory feet continue already the We to defined.

Operator

all today we have the session. Q&A time is This on for

for So I'll over any to back hand Bob comments. closing

Robert Bennett

you customers, and amazing thank public EngageSmart to you, those as our company. first in. for our XXX almost to teammates A listening for and in may call thanks special that a Thank have our earnings listened partners

-- are it, it's continue to crush You and folks appreciated. greatly

the $XX opportunities we are comment, last the and front excited growth, very you of billion TAM a our us. in about Just Thank future, incredibly our much.

Operator

call. Thank everyone, for you, joining today's

disconnect have day. now lines, lovely your may and You a

Engagesmart (ESMT) 13 Nov 212021 Q3 Earnings call transcript