ESMT - Earnings call transcript Q1 2022

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Operator

Good morning. Thank you for attending today's EngageSmart First Quarter 2022 Earnings Call. My name is Emma, and I'll be your moderator today. [Operator Instructions] I'll now turn the call over to Josh Schmidt of EngageSmart. Josh?

Josh Schmidt

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

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

our with be annual During this could materially XX-K report Risk Please EBITDA. information more why and on those SEC found the these can from both Factors the the useful certain business. information statements. regarding information. our provide in of management available on believes Bob to and metric by live forward-looking these nearest call, which to Actual Form call call for of differ statements to statements now GAAP will these supplemental metrics, associated of be like to measures is Investor press discussing other as turn forward-looking contemplated certain earnings section on This investors.engagesmart.com. risk release factors refer call, metrics would webcast well results at available forward-looking CEO, our presentation, section we are replay website will risks we on our the for regarding over this as A being of website. I On Relations non-GAAP filings and be Bennett. the will non-GAAP discuss including reconciliation our and our adjusted

Robert Bennett

welcome our quarter first to and earnings XXXX. everyone, morning, Good for Josh. you, Thank call

XX% growth continued year-over-year, north in engagement results XX% of XX% segments organic progress. robust to of topline strength quarter We reflects to SMB's employees representing our customer EngageSmart's business. both excellent and visible simplifying another year-over-year, with finishing customers another satisfaction. are at million, directly delivered growth are demand of organic strong customer EngageSmart $XX.X of of client announce who durable to pleased of growth our relentless due quarter combined the mission and of QX can and with the revenue, year-over-year. of our be dedication their in of growth XX% of highly pursuit Enterprise's and partners attributed of record

the share with you our dives excited performance, this are Cassandra highlights of really I'd into about financial Before details quarter. some the we that of like to

We have outstanding segment, XX,XXX of wellness professionals now verticals. in SMB serve where customers we in growth to XX% our see and nearly count customer XXX,XXX continued XX

Our is driven of strong word strength suite. mouth the our customer organic end-to-end growth product in primarily SMB by and of

first in a have As result, to time, vertical mental practitioners, experience we professionals. the we health new traction our verticals. led ground great gain to continued with same At by of continue

our therapists billing requirements, practitioners mental specialties in speech in about are these believe product pathologists, needs, and market inherent customers in points trajectories because career with as excited particular language We our fit pain occupational have similar we these progress a We and health. have dieticians. strong documentation

potential pathologist in working features, are to four-point our features XX unlock SimplePractice we full speech SimplePractice For and resulting example, billing, that our all enhance She own her single To paper chose systems her started comprehensive of and functionality allowing continuously solution. from notes, and our practice of new evaluated language transition our in headaches. EHR further one solutions using records verticals, XX superior SimplePractice solution. our paper of its to because paper huge on

price new participation. value our to valuable to In increase revenue to or also a feature have with improve In customers. built-in allows better client that pricing packaging This we we seen driven the QX, per SimplePractice reasons. an a particularly is practitioners meaningful add As working young with we and align first speech boarding in telehealth, a combination quarter, out by customer average of rolled and bring to recently to the example, launched images we for language type practitioners patients white pathology. draw,

QX than continue positive We to anticipated customer we we've selecting top mix anticipated. within our due funnel see plus encouraged strong to more to churn appreciate an strength experienced in us. QX by our better continue customers to grow expectations, of additionally, results package and growth, is At revenue trending and our are originally customers their The existing these same We than solution value. and businesses the by our results with package SimplePractice very the marketing we is uptick migration customers Lost date. from superior fact efforts. related increased reflect customer continue referrals in believe the time, the our of the to to that

transactions believe they our ARPU and more through to and in higher-priced outstanding us, leadership. product add they our packages new directly switch growth related customer fueling SMB is to growth satisfaction can thus process revenue and our As practitioners, We increase. revenue

are We and practitioners, innovation addressing to pain including multidisciplinary for practices. group committed points

we and to As releases telehealth, feature prioritizing incredibly a focused result, remain enhance our road and on workflow map key advanced security on functionality. collections

benefits payments. to insurance insurance be and in-network For able to struggle patients' their example, to accept practitioners frequently verify

provider uniquely to a reach. process otherwise of offered a practitioners We simplifies this population boosting healthcare and By seeing making the numbers and rate healthcare are to to processes that accessible services, we thus at as be participation improvement by patients collections. adopters such already we positioned this, to in-network patients early in-network With to have might able are insurers. are to released our SimplePractice, a discounted practitioner difficult simplifying verification feature in that meaningful drive connect

network healthcare signed our large the efforts Monarch, solution very access practitioner Our to a to a to our we We pilot a drive we of drives customer's assistance our Monarch, patient program beyond this of to a progress continue Monarch fuels testament to excited network care. that a an recently with each direct initiative. augment and which program, patient context. access practitioner and our and to base. is is go and base creates employee With designed to extension power about growing by are Monarch flywheel

motion tailored in customers solutions. momentum saw partner-assisted solutions. on our first believe and quarter new driven based the selling strength in We wins X,XXX adoption customer is the serve our now success vertically Enterprise. our excellent continued of digital our to customer by go-lives, Now three and We turning our across

For InvoiceCloud, in by and recorded of These largest segment, number notable in city Tennessee driven Metro York, a customer the Services. Nashville, strong we include the of the New Enterprise contributor of launches. Texas Syracuse the quarter go-live new revenue Denton, city Water another

Insurance for months. Farm Kentucky the streamline more enables and our traction vertical. insurance the Area These in to InvoiceCloud of software speeds our the and International, payment billing Water in We beginning with are excited Mobile cloud-based alliances we experience a launching the performance and casualty mind won unique offer and customer Missouri. States on in outstanding We recently Resources new forward Driven industry, to Guidewire, processes; for Central looking We including customer from businesses the a InvoiceCloud's result customer by focus about also we for & up reduces outstanding them are are collections. wins in gain Sapiens insurance QX. and creates sales Water in coming engagement Alabama Sewer software our insurance system provider, online provider that of billers to customer and property solutions and signed payers. Bureau global complexity, opportunities, with peace payment

versus drive our product solutions. digital that stuck-in-time, is adoption. and SaaS, we customers on-premise receive true With superior hosted all customers help Our differentiation enhancement key continuous

on leadership customers payment is adoption our InvoiceCloud solutions. to payment directly also related a product to their in continued is success our driving across Our regularly experience uniquely enterprise individual forms. needs new digital that by focus suited offers accepting

our payment form we our As an recently with activity an And new of DonorDrive, In crypto first through accepting a began non-profits we quarter tracking. a released fundraising of check-in that for PayPal with for have an exciting mobile contactless as app example, event and and apps fundraising enhanced features first best-in-class version quarter its solution strong in the of off XXXX. corporations, start for had XXXX. includes to are summary, to and integrations partnership

see hand market CFO, our continue solutions leadership testament customer and strong driven capabilities. net Hudson. growth traction revenue of vertically engagement retention. to our the I'll the software call With and We SaaS customer in with strength is integrated that, Cassandra business to by model over This position to great payment a and our Cassandra? excellent our tailored

Cassandra Hudson

joining you, with our delivered us call. that our today exceeded saw excellent well revenue both appreciate and everyone our broad-based the strength SMB. for across We QX QX and saw of Bob. segments particularly We we guidance. XXXX pleased earnings business, results are I within Thank EBITDA adjusted we performance

at rest midpoint $XXX of or million the As million a XX% our growth at guidance increasing to $XXX million the prior to our or the range, to on our of for up growth outlook are from XXXX of million midpoint. result, XX% revenue $XXX we $XXX

by fueled processed. of strong and in revenue million $XX.X QX year-over-year total XX% customer grew was and count transactions growth Our

mainly our count XXXX, additions end of increased in SMB transactions by in period. prior to million ago XXXX, QX XX% versus and marketing up customer the QX the As digital was growth new in year-over-year from saw our the year driven by word-of-mouth programs our processed XX.X and of Similarly, XX% from customer transactions segment. total our referrals year in we with XX.X solutions million XX,XXX

continued highlighted revenue add-on growth. expansion customer year-over-year $XX.X and to million from existing continued revenue by perform segment at XX% new customers Subscription and coming $XX.X well strong with quarter first was exceptionally XX% million, Our grew representing SMB subscriptions. of adds in with

new our our pricing mix rollout solution. created anticipated. the As for package and we mentioned, higher early are a originally existing fully superior had Bob featured attribute our were than packaging selecting of utilizing results of with customers this the to plus who the value customers strong We

usage-based expectations. mix private with was which XX% our new starter selecting as of flexibility provides to practice continue For process and revenue our to more the $XX for the customers customers line greater Transaction in QX, transactions our practitioners, platform. grew in customers on package, million of new

increase higher in with flowing a We of adoption an platform. also through payments saw customers' our our percentage

representing delivered representing from we derived segment solution. you stronger growth adopted which transaction XX% to Enterprise InvoiceCloud, with reported provide I'd fees, growth than To on million, majority anticipated also At topline, Enterprise. Our the like more drivers primary the SMB older walk revenue our Enterprise strong cohorts through year-over-year. results our further in $XX.X of and our XX% payers and of for saw $XX.X growth growth. year-over-year The at in revenue usage-based is vast from came the segment million, as a color

continue in we SMB, top of strong our to For vertical. trends mental funnel health see

aware SimplePractice allowing us our reach that broadening in marketing increase is Additionally, previously brand, audiences were spend our not of solution. our to

increase new only In and the as we that efficiently, to enable to beginning that careers. By expect acquiring to their average revenue their at practice. addition choose per Many customer solo time of grow solution. over practitioners just more helping are driving focus to own customers, the transactions are growth. practitioners their through on them them their our add and ultimately process we more They licenses practice, continue to our their manage business revenue practitioners opened time SimplePractice

are As grow about these opportunity over our to we attractive practices features expand excited practices. we to group time, with business the see

we health on in playbook verticals. our our successful to other Additionally, progress strategy our wellness continue of replicating make mental with

are more efficiently manage on our of verticals these in around with a helps practitioners We solution their wellness build businesses. sense customers community engaging that focused to our

visible we and We mentioned, performance dietitians. our number revenue and build with core are growth. QX in language of customers and highly pathologists, sales currently excellent Bob had a both Enterprise, occupational and we seeing verticals. in continue And As speech our to emerging in won therapists traction on durable

fueled alliance solutions. Guidewire. They of is the growth Harris and enterprise strong Group clients referring by by and Utilities Our existing implementations driving our product growth accelerating including are established our our partners, and leadership

and our implementing about are are looking our the partners forward our We customer in solutions to success future. pipeline and excited with our

we a with offer high because uniquely digital superior Gas. adoption that our payment Secondly, existing rates drive such continue National of their needs. as is to experience payers' adoption customers, suited We to Fuel digital rates see and billers we

adoption We process payments through ultimately solution. more marketing and as revenue are driving combined our growing billers through digital onboarding efforts,

to margins. on moving Now

to our driven with plan mostly Our $X.X in in for from costs well increased in revenue, pricing XX.X% segment XX.X% that XXXX came QX costs of at SMB. existing in QX $XX.X rolled the public margin EBITDA Adjusted product and the from company of new including the our QX, growth up as in XXXX. adjusted public the our operating product expenses with R&D due new line that top funnel goal marketing our acquisition. million, marketing as leadership. expenses engineering impact up $XX.X driven by SMB we within first our representing customers following million, new customer the $X.X was and launched of wellness SMB. quarter programs brand middle new XX.X% markets In the last focused target $XX in channels in million, our for $X.X in and broaden headcount up absorbing XX development reach invest to to of we September. Sales XXXX, within gross on and packaging G&A XX.X% our were investment out in million $X.X solutions enhancing new of were quarter, initial million by offering margin, or to mostly million, $X.X compared million, margin maintaining million,

Given see product the while marketing exciting and development costs and in we absorbing to highly sales increase public opportunities long-term company profitable. in drive continue revenue still we marketplace, the and investments to growth remaining

the quarter our outlook year for to second and full Now XXXX. moving

year-over-year to million, the of $XX range growth For which of midpoint we range. our QX, XX% the revenue at expect million implies in $XX.X

expect represents adjusted EBITDA XX.X% at range and of in the of EBITDA million, an We midpoint. the $X.X million adjusted margin which $X.X

to $XXX range we full-year, of the XX% in now the For at midpoint and expect million of a million range. be revenue approximately $XXX or revenue the the of growth

the margin of million For full-year, which for to adjusted XX.X% EBITDA at and EBITDA of represents range we adjusted million, roughly $XX an the $XX be expect in the midpoint.

at now have in for years opportunity the we turn continue growth to we over to back topline comments. our Given record or the track success, to and Bob rates closing current our I'll target come. for XX% call above markets of

Robert Bennett

Whew, Thank great you to Cassandra. numbers.

paying a bills, on-boarding appointments, be EngageSmart activities to patients great client new hard. and scheduling founded communications We because shouldn't in are like We XXXX. off that start

by driven simple is success factors. Our three

First, our A-players. playbook proven by customer-focused driven

drives continuously have our rapid the exceptional and team growth, add our seen hiring momentum Our success. quarter. support organization To we in to people great first our

focused, We workforce future. are ready the proud such to a to take have on dedicated highly

work by the measured choose as retention. best. because with they leadership EngageSmart to product and Second, Customers adoption want

as and committed customer revenue leadership, and are our We adoption great developing shows, to continued vertically product net tailored solutions and success our enhancing to drive by reflected retention.

and Third, a market our runway. X% and We have address large captured U.S. share. market about market billion $XX of

excited on appreciate call customers, you our well remain domestic our business are leadership, make very world. growth and product while We joining execute We runway, are all strong that a record growing shareholder want positive creating to and the this you given promising we on value we focused of We positioned through thank our and extremely us track on impact about in delighting this to much. opportunity.

Operator

[Operator Will question Instructions] And we'll take our first from Nance of Goldman Sachs.

William Nance

you I'll Bob, the Wonder the well. in of is sounds going if Obviously, performance pricing numbers like segment should out the very and how quarter I'm expect help and initial whew, the to pricing the about contributed if unpack morning. the Good then year? customer guys. echo your time pricing we of of Hey, mix there, great the numbers. on strong segmentation spend talk a some the the you could SMB working about versus could acquisition And SMB and of talk strategy numbers? expectations. and some in wondering segmentation drive it this forward, and for remainder much you of just kind quarter's could how to trends kind

Cassandra Hudson

Thanks, Will. Great.

for and us, across So back I payment just strength really customer then on starting for or results pricing rollout QX taking the mean, on acquisition Strong processing and I just on the pricing guess right? packaging. broadly, new quarter vectors, the quarter step all a maybe of strong new SMB side positive

strong really results really Board. across So the

think, been better the the and anticipated that and what with Results from on we were really new that seeing functionality we And uplift in our far verticals make expecting have that points of than a to few based aligning we overarching so on pricing roll pricing we the features existing our a customers. Plus sure highly we're strategy it's us inclusive new price our by packaging think scale and the with X% and ARPU continued customers. And to we're of trials and grow encouraged higher us and got into to help to quarter. out expectations. Obviously, value adoption as largely. we this we Originally, had our did our that we'll in about rollout, right. one in you so conversions. that we're of and XX% the that mentioned remain flexibility come But offer far, Bob And think churn, because pricing we was give package, ultimately, that exceeded overall, new to rollout. new we future seeing we strength packaging bundle move to know, model new more and we the the As

trends, see of and In going to all SMB, continue continue. of revenue drive is a of how mean strong I we from strategy to I growth core our that think we're you'll terms growth vectors. to trend that coming certainly of still those mix three to expect in

William Nance

Got it.

Sounds about sounds to trajectory some than great. of guess, acquisitions. opportunities of much through in margins you you're to anticipated. for there start current you're the it talk see if line a the customer the we it's just stronger wondering then the the nice in outperformance bottom flow-through how I'm year. making of thinking that remainder are the Obviously, really like And I especially had And could the environment.

to So just bottom wondering of in acquisition maintain the the strong rates. the you're outperformance kind flow to letting kind of reinvesting of line versus growth balancing, how some customer

Cassandra Hudson

factored right? customer more our on be have new think the engine I We it's SMB you right, guidance mean, to side. investing it acquisition the exactly I in Yes. continue into and

our to of the through execution. bottom It's revenue think I the truly flows line not matter having a it intent. be is

a deploy going executing really intent that. against a we're bringing It spend. between our the while takes takes against ratcheting time. well, and investments making our to more to is then there's customer in these just I But and lot engineering incredibly think deploy on. But the product investments team it continue on resources to is the acquisition up that

William Nance

Appreciate questions. taking you results. the it. Got Nice

Cassandra Hudson

Thanks, Will.

Operator

from with next Deutsche question Bhavin Shah comes Our Bank.

Your line is open.

Unidentified Analyst

is Rod This line the on for Bhavin.

So of bit. point follow-up just little on kind Will's a to

the revenue about in revenue referrals you churn strong. how was pricing remain on – change, So line, talked

of helping to medium-term bit you is cadence price any But so And of a envision in the marketing I'm Like great. awareness guess that that's trying view, how guys that's activity. maybe it's Starter at Plus, to now I the maintain higher regards the are you for just with the ahead size by you the think future specifically? unpack drive impact guys of more, there's top maybe SMB to in spending do cohorts versus to – envisioning the offset change funnel through margins obviously from of change to traction. But some brand but pricing the historical?

the as friction, maybe that and lever of to in base. use [indiscernible] best a the capitalize it's viewing or but but value help saying, of how those the of yes, on that bit as which lot like as there how kind a came little maybe just competitors all competitive you're a manage the well, general that you checks, of response and offset kind back extent we to impacts? – and In obviously thinking saw people proposition, that in dissatisfaction lever the you're umbrella on was So like we either about to client marketing pricing trying

Cassandra Hudson

careers and point migration they're path a three-tiered customer our younger going better said more needs Yes. journey We certainly, us price pricing we original price intent, new to our that package the We are point. broader wanted packaging model, that we flexibility really for we flexibility. lower these gives us on your attracts right? gave offering roll to earlier spend, we how kind of on moved by and forward, at marketing out I believe lot set like on, align to I packages a mean, of a this of customers on earlier on – didn't and and greater that that in have their the before practitioners a I guess,

aren't trying had can I the customers customer base our customer They're pricing new pricing remains you to – we increased vast will. to things. trying the and just reach acquisition, all them, or grow migrated we moved offset vast on think to of many packaging. over entire I and two our guess, today. But spend right? overwhelmingly of customers existing as I somewhat all don't – if our marketing our within drive new about verticals to necessarily dialing We think QX. the we new wellness separate fast The as same demand to up across separately, new strategy right? that, We're as majority

in foothold of have, in and seeing We a traction you know, new mental we're as health, lot verticals.

levers kind separately, gets your of So question. are heart the those to that really, of being deployed if

Unidentified Analyst

it more growth is I got right. you Yes. that It by, specifically? client. I I is the SMB a on Or make it sure customers want the out basically in across And then just But incremental mental as across seats, practices coming does. driven expanding health? I transactions, to just practitioners as new it called just Is grow? by follow-up, verticals, new think is the per But side transaction driven the solo on guess – how transactions got think,

Cassandra Hudson

more strength of board right? one the per the clinicians from that. seeing happening increase we payments in So across increase is those to it we are the account. average as in then mean, for ticket, transactions the process get of the to SMB natural number payments, And their that adds we're continued our terms clinicians your of in accounts each in that practice, I point, see and growth

it then adoption. all really So And is just overall three.

through there. benefit our a of we're that. strength in And seeing obviously, lot payments from growth transactions the So process, the platform, our that customers more their we and

Unidentified Analyst

Bob. congrats Thanks, Thanks, again. awesome. was And It Cassandra.

Cassandra Hudson

Thank you.

Robert Bennett

you. Thank

Operator

comes Securities. from with Truist Terry Tillman Our next question

Terrell Tillman

if hear I quiet. by eerily Can me Yes. you Josh, can I'd the didn't me numbers Hey, way? you and okay, say, It's well. great be Bob, hopefully, okay. And hear Cassandra remiss as I whew, guess

Cassandra Hudson

Yes.

You sound great.

Robert Bennett

little more enthusiastic, could yes… have That but been a whew

Terrell Tillman

quarter, No. how well, next – okay. that? maybe yes, I So about Yes. Yes. need

I words So to initially if got add had business. million-plus just cut all the with idea up X-figure ramp just these is mental when put in faster speech and health? in mouth, of first question business, And the occupational one the you. mental than and I the I now you basically around businesses related health. practice sign accelerate you but mean, as second pathologists, And I'm there SMB is that mistaken, a language not to you that's traction, – I part curious basically from your a share follow-up? from is saw I'm your anything that learnings therapists dieticians, teeth capabilities even a health scaling set on group new could you broader and learnings or mental of don't customers, then actually the $XXX help could to you've there? Thank emerging of want had

Robert Bennett

Terry. Okay.

lot and entered, SimplePractice's that there's they been mental yes, was a course, there. learning of vertical So first certainly of health,

grow other relate pathologists group your of practices see frequently there multidisciplinary still professionals tremendous that was group that burden The a that We SimplePractice, customers part have. larger might first their working well And be thing about practices. to that as and to to we're clinicians can its course, is groups, eliminate group we And it administrative sort as businesses on hassles of for a and lot language question, much seeing speech tenets the room health basic with health so marketplace. a part doesn't of mental their hundreds grow communities nutritionists forth one have of of administrative continue and successful is be mental to others demand of in of the of does we their that aggressively. think We focus multi-clinician which those without group to and so all clinicians It practice. single need practice. in

and add So course, seats, payments more drives forth. clinicians, to and they're ARPU so up with of that more able

wellness of specialties really parallel. business, of as all lots base our specialties. mental have run learning well the different in across So clinician The same the XX run verticals health. from essentially they new as just They

in of others. driving trials one, So to typically, free what we terms learn in even applies top-of-funnel

adjustments out So your nuances making of Terry? Does about. what accommodate it's that to to of the getting word that's kind solution each answer verticals, we're the and and of the the question, the

Terrell Tillman

rate a And does. Cassandra, kind on adoption Yes. there's rates, don't that. – know digital if Thanks revenue any to It definitely but for theme if for I'm of this or is or could sales to like adoption I to curious digital any to just environment an like on that's more And I potential move the digital of net kind transactions could quantify way rates. impact to it the maybe adoption you your look guess you a at there's more of on you and more higher me, retention. trying double-click it. And wrong incentive seems But real in fashion, for inflationary these customers. same-store

see revenue? to potential could digital adoption? push any Thank you kind of more trying on net share to that Just or proactively do sales impact you. either same-store the even them So you more and

Cassandra Hudson

driving they the side, the the payment is I the highest for of processing they're adoption customers mean, ultimately, what digital and see us we use see obviously, especially SMB on level service, that value. our

very, sticky, right, management So very business very really the offer capabilities solution. They're of clear. because it's that they're using also in all we our

rate adoption tick to digital up over time. to that expect We continue of

But kind that to growth the trend our lot QX, I our expectations. think over macro core be of that's revenue it long-term. exceeded think should certainly we broader a in

Robert Bennett

way not environment, that, the mentioned inflation. inflationary And about we other the Terry, thing is price, Yes. a negative. you the

positive actually clinician the average is up us rates SMB payments go a as and that on hour So more go up, side. for that volume creates

Terrell Tillman

Okay. Thank care. you, all. Take

Cassandra Hudson

Thank you.

Operator

Blair. William from with Napoli question Bob comes Our next

Cristopher Kennedy

for of there wanted the Good to to morning. get appetite seeing Actually M&A it's is deals? the what question. kind your Cris on you're for what update environment, just Thanks taking I an Bob. on and pursue out

Robert Bennett

Right.

it's Cris, So Bob. hey,

And a nothing the lot pursuing equilibrium threads in immediate on ask the it. the quite as M&A, public with company, exploring multiples, you the but organic-first of market intend and we're are I'm right our achieved has as certainly know. now announce. inorganically very We different in we M&A to we're as drive But organically. an to sure side that active not it to well growth continue are

Cristopher Kennedy

marketing. one And on one then Understood. last

Just kind a about customer Thanks of costs increase your acquisition marketing can you are talk spend as your you lot. trending? how

Cassandra Hudson

think touched intent lot where broader marketing customers. I of especially this a reach we investing our on with the customer a example, branding, call certainly, highly mean, really we side. digital spend mental side. programs efficient our acquisition we But very to We're our a as gave know, is lot on guidance. this new XXXX set year for on marketing of have on the in a health testing And I you model,

is still rate. expectation at down we our ticks obviously, best-in-class So invest a as but very attractive efficiency that more,

we're you still, as rolling kind new onboarding to new early out the we're SMB days QX marketing programs, months nine of six team, on a will, the think if especially in I side. over past

So long-term eye to that's certainly manage business more come. and to investing how to and keen efficiency a drive our keep We ROI, growth. and we

Cristopher Kennedy

Understood. Thank you.

Operator

Davis from comes John with Raymond question next James. Our

John Davis

customer for and to specifically Bob Cassandra. a and second, morning, the segment adds. good touch wanted on I Hey, SMB the net

occurred that in the add year? last quarter at some Or that Do first the that at more given pricing of of this think you strong kind cadence quarter I back from would you we or point, of most can spillover churn a think likely there X,XXX customer XQ? you is to churns had to have get roughly changes. pricing had that any very done the X,XXX

Cassandra Hudson

Yes.

for point. the But has we're – and February overwhelming and large, customers happened, QX, and had and our JD, I the still March. in your by the happened, in it's pricing packaging majority think large, by through migration existing to

for the lingering some the by is large, spill to effects we're there through most of think kind in and of do potential I over. QX But So it.

John Davis

pricing then really that side think to was on XQ. just Okay. point the that of And in fair XX% things, quarter say about of half the a driven is year-over-year it? ARPU XX% kind to simple Is I it it Is a think impact? largely basis acceleration up kind in way XXX business by specifically and versus of enough SMB strong,

Cassandra Hudson

saw strong really that we typical in we've of been Between payments of little both. pricing QX, results a kind seeing. actually It's and average above payments, the bit

bit of So it a both. little is

John Davis

me. last Okay. And then one for

expansion investor the think this year. flow-through as on longer But there. think unchanged should roughly of kind number, to you good it but think trajectory see do a of longer I kind how myself about how about to and I in and Given others you back, the these Or pin the to cadence and term? profitability beyond? How would term? trying think guide helpful XX% for step guys really you days, margin to be think Cassandra, of we just it focus XXXX the about we margin investors the understand Not has guys

Cassandra Hudson

and on company Yes. I we're costs. public investing a SMB the marketing the side. year, in this lot development engineering, product also mean, certainly, We're absorbing

that investments get investments see us. and ROI through once adjusted a think the expect But We're those modest the look XXXX, over I revenue drive always it's we intended So to expansion few balance. lens always years. making. we topline EBITDA of margin going to the growth we're for are increases through in next And to

in think up to but see you'll pick things So a start XXXX. it's balance, I

John Davis

Okay. Great. Thanks.

Operator

We'll go Needham. Scott next to Berg with

Scott Berg

of in sure is quarter. two QX? I something Omicron QX Hi. one QX got rationale back questions. out have in and the different the don't great is segments, both Bob, know, impact QX. I that terms of in from not two, processing But transactions certainly QX I bookings to first you that? your came guess take to on showed it's wants acceleration than is, growth segments guess, maybe congrats I'm Cassandra, revenue as at maybe I might guess think look new the business one. a different for Thanks interesting, any I who variant try explain to Or I than there which the was of, taking

Cassandra Hudson

I surge. mean, in direct saw the any of most wouldn't recent Omicron our COVID I as result a we or that say topline acceleration

just I quarters. certainly, think We saw we – given and this, in tougher the had XXXX the revenue XXXX. we acceleration over compares messaged couple in last some of

we've growth. so the couple heavily XXXX. years drive And level this pretty it's continue also think to in been more investing over of I compare of really, But issue past to a of

given on topline with So things kind the are those out playing really now investments. pleased how of

Scott Berg

softer to this performance? it, right QX in five then kind think versus you. way and modeling from a about kind in Helpful. to diverge gross the quarter maybe a it. Got the call XXXX of of about little of quarters XX.X% of perspective, XXXX in you margin best levels gross from had And your to, back bit Thank and range margins get XXXX. Is XX% does maybe rest throughout the margins year? the Or it

Cassandra Hudson

invest support a in in obviously, certainly our in we And packaging I still pricing lot continue and of of mean and customer impact just make a positive saw on to business. margins. made slight licensing. we We to back-end platform in gross telehealth, have directly a investments investments and we XXXX, our had – lot the

think I will continue. those investments So

As optimized line you we're on well know, today. pretty the margin

ZIP may we're we're slightly, in of while. think be tick going but up code So kind I the that to for in it a

Scott Berg

for taking all the questions. I Thanks That’s Great. have.

Cassandra Hudson

Thank you.

Robert Bennett

Thank you.

Operator

with We'll go next to Ashwin Citi. Shirvaikar

Ashwin Shirvaikar

the Thanks. Pretty to a Bob, great hi, results and start Cassandra. Hi, year. solid

Cassandra Hudson

Thanks.

Ashwin Shirvaikar

Yes. my growth though rates are That's actually easier seems higher even XQ the acceleration question the the are than to where in base. there going. and the half Obviously, first expectation, back comps full-year be in is

outlook, But year. this given in sure the reading far the any want through not that XQ. of just it's seasonal conservatism concerned I'm as of I nuances I'm numbers is other course make the So cadence the or to as as missing just

Cassandra Hudson

– that guidance obviously don't I delivering that seasonality terms think put we mean we're missing. you'd in if nuance, against. you I will, any be confident there's of We out in

things where there's go to lot in we're with revenue that of still we Pricing able a the relatively in increase and happy a I performance is and but of working think QX. with lot the with we're range stuff and the year. for to through. on early It's need right. happy year we're pleased But new also packaging really are being

Ashwin Shirvaikar

Okay. No.

bit Any if distribution a sort And diversification of and of pipeline, the sure. the it? little about talk more on making Just you Enterprise can color there help? would

Robert Bennett

had. We the InvoiceCloud: as as first our was I strong all well bookings as it quarter Ashwin. a robust quarter the And all of segment, was strong actually in it And have well government Hi, across for Yes. strongest of quarter. think utility, but insurance very a We insurance – the our tax selling there. bookings of billing did InvoiceClouds quarter.

can So yield. focusing seems engine a be I and on that say alliances right? think it that's Enterprise. bit all to about done Yes. I I the strong we've is having of would some there little internally, – It based was say a all good. working,

Ashwin Shirvaikar

you, deeper just don't bit in you kind that Could get if alliances? of mind, terms a little into the of

Robert Bennett

it's get competitive integration away of a and all without Well, higher partnerships of the our you will, the giving better teaming around deeper of information other just that much it. on available top entries, too alliances, alliances to support funnel more drive readily could throughout side and relationships, if around become way to and into the through the focus end-to-end,

product. our the of with it's is we product-leading the customers and deeper integration both and way information Part the our alliances. product that our all of with supporting relationships customer after within systems long-term. that product that you So integrate just mutually are InvoiceCloud and going know, we integrations the – our bring as of enterprise products all actually are so the depth our is – products, alliances of alliances, we Including those the

integrations can customers of So the a our through value proposition. which is we depth the drive to in our we that do critical value those part that and

of lots and being drive effort and customer base. to value effective stickiness there our among highly work done So

Ashwin Shirvaikar

Thank Understood. you. it. Got

Cassandra Hudson

Thank you.

Robert Bennett

you. Thank

Operator

Our comes with from Josh question last Beck KeyBanc.

Madison Schrage

revenues continuing Congrats front back is bit you Maddie then we I on most if on the if within strong penetrate transaction the the lift, guys. pricing And in the I growth. remain Josh. on to SMB. to Hey, wanted near-term? stable. package the reaching And those on should guys as payments quarter. Thanks. ARPU for we results little that see strong ARPU Where could again seeing? that touch a wanted Wondering further percentage popular to are touch This should see you of customers, in what's ARPU

Cassandra Hudson

really I on quarter I – So strong it do was payment again, the a side. think

transactions payments, driving from ARPU an I to to and in revenue contribution continue. activity growth. to in QX we'll growth continued we strong continue something that Add from think on expect see perspective, strong was

So part has an there? it? forward I will just going third you been. do growth mind revenue like it was a important our Would of question there think it And repeating be

Madison Schrage

what's in wondering most was I package just popular pricing Yes. is the SMB?

Cassandra Hudson

now the Prior the rolled to to we've packaging, were this of concentrated in trend We're before pricing kind package, our overwhelming that of packages. packages XXXX heavily on today. translates out our majority new and two customers the and top top top two

Madison Schrage

you. Thank Awesome. Congrats, again.

Cassandra Hudson

Thank you.

Operator

pass registered Bob There remarks. are the Bennett for this questions time. I'll to at no additional closing conference

Robert Bennett

delivered opportunity. call growth performance a for Have across per again our great results Thank at market Thank JPMorgan and quarter U.S. Communications drove huge to positioning numbers, retention. Conference June questions. at record excellent Blair's another this summer. customer and are business in first customer May, XXXX. you Momentum all all in average increase revenue of Overall, outs Technology, in look you on and we your revenue this address growth EngageSmart forward QX Media in year-over-year Global customer of Stock our continues speaking the to we Annual exceptional the our as Stand strong compelling William with quarter be XX% with record us, the you for and joining day. Conference and Growth profitability.

Operator

This does participation. conclude your for you today’s program. Thank

You may any time. disconnect at

Engagesmart (ESMT) 8 May 222022 Q1 Earnings call transcript