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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Unless the context requires in any other case, references on this report back to
“EverCommerce Inc.,” the “Company,” “we,” “us” and “our” discuss with EverCommerce
Inc. and its consolidated subsidiaries. The following dialogue and evaluation of
our monetary situation and outcomes of operations needs to be learn in conjunction
with our unaudited condensed consolidated monetary statements and associated notes
showing elsewhere on this Quarterly Report on Form 10-Q and our consolidated
monetary statements and associated notes included in our remaining prospectus for our
preliminary public providing of our widespread inventory (“IPO”) dated as of June 30, 2021
and filed with the SEC pursuant to Rule 424(b)(4) on July 6, 2021 (the
“Prospectus”). Additionally, our historic outcomes aren’t essentially
indicative of the outcomes which may be anticipated for any interval sooner or later.

Overview

EverCommerce is a number one supplier of built-in, vertically-tailored
software-as-a-service (SaaS) options for service-based small- and medium-sized
companies (“service SMBs”). Our platform spans throughout the total lifecycle of
interactions between customers and repair professionals with vertical-specific
purposes. Today, we serve over 500,000 prospects throughout three core
verticals: Home Services; Health Services; and Fitness & Wellness Services.
Within our core verticals, our prospects function inside quite a few
micro-verticals, starting from dwelling service professionals, akin to dwelling
enchancment contractors and residential upkeep technicians, to doctor practices
and therapists inside well being companies, to private trainers and salon house owners
inside health and wellness. Our platform gives vertically-tailored SaaS
options that tackle service SMBs’ more and more specialised calls for, as properly
as extremely complementary options that full end-to-end choices, permitting
service SMBs and EverCommerce to succeed out there, and supply finish
customers extra handy service experiences.

We supply a number of vertically-tailored suites of options, every of which follows
an identical and repeatable go-to-market playbook: supply a “system of motion”
Business Management Software that streamlines each day enterprise workflows,
combine extremely complementary, value-add adjoining options, and full gaps
within the worth chain to create end-to-end options. These options give attention to
addressing how service SMBs market their companies, streamline operations, and
retain and interact their prospects.

•Business Management Software: Our vertically-tailored Business Management
Software is the system of motion on the heart of a service enterprise’ operation,
and is usually the point-of-entry and first resolution adopted by a buyer.
Our software program, designed for the day-to-day workflow wants of companies in
particular vertical finish markets, streamlines entrance and back-office processes and
gives polished customer-facing experiences. Using these choices, service
SMBs can give attention to rising their prospects, enhancing their companies and driving
extra environment friendly operations.

•Billing & Payment Solutions: Our Billing & Payment Solutions present built-in
funds, billing and invoicing automation, and enterprise intelligence and
analytics. Our omni-channel funds capabilities embody point-of-sale (“POS”),
eCommerce, on-line invoice funds, recurring billing, digital invoicing, and
cell funds. Supported fee varieties embody bank card, debit card and ACH
processing. Our funds platform additionally gives a full suite of service commerce
options, together with buyer administration in addition to money stream reporting and
analytics. These value-add options assist SMBs to make sure extra well timed billing and
funds assortment and supply improved money stream visibility.

•Customer Engagement Applications: Our Customer Engagement Applications
modernize how companies have interaction and work together with prospects by leveraging
revolutionary, bespoke buyer listening and communication options to enhance
the shopper expertise and enhance retention. Our software program gives buyer
listening capabilities with real-time buyer surveying and evaluation to permit
standalone companies and multi-location manufacturers to obtain voice-of-the-customer
insights and handle the shopper expertise lifecycle. These purposes
embody: buyer well being scoring, buyer assist techniques, real-time alerts,
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NPS-based buyer suggestions assortment, assessment technology and automation,
fame administration, buyer satisfaction surveying, and a digital
communication suite, amongst others. These instruments assist our prospects achieve
actionable insights, enhance buyer loyalty and repeat purchases, and enhance
buyer experiences.

•Marketing Technology Solutions: Our Marketing Technology Solutions work with
our Customer Engagement Applications to assist prospects construct their companies by
invigorating advertising operations and enhancing return on funding throughout the
buyer lifecycle. These options assist companies to handle campaigns,
generate high quality leads, enhance conversion and repeat gross sales, enhance buyer
loyalty and supply a refined model expertise. Our options embody: customized
web site design, growth and internet hosting, responsive internet design, advertising
marketing campaign design and administration, search engine marketing (“website positioning”), paid search
and show promoting, social media and weblog automation, name monitoring, assessment
monitoring, and market lead technology, amongst others.

We go to market with suites of options which are aligned to our three core
verticals: (1) the EverPro suite of options in Home Services; (2) the
EverHealth suite of options inside Health Services; and (3) the EverWell suite
of options in Fitness & Wellness Services. Within every suite, our Business
Management Software – the system of motion on the heart of a service enterprise’
operation – is usually the primary resolution adopted by a buyer. This
vertically-tailored point-of-entry gives us with a possibility to cross-sell
adjoining merchandise, beforehand provided as fragmented and disjointed level
options by different software program suppliers. This “land and develop” technique permits us
to amass prospects with key foundational options and develop into choices
through product growth and acquisitions that cowl all workflows and energy the
full scope of our prospects’ companies. This ends in a self-reinforcing
flywheel impact, enabling us to drive worth for our prospects and, in flip,
enhance buyer stickiness, enhance our market share, and gas our development.

We generate three kinds of income: (i) Subscription and Transaction Fees, which
are primarily recurring income streams, (ii) Marketing Technology Solutions,
which incorporates each recurring and re-occurring income streams and (iii) Other
income which consists primarily of one-time income streams. Our recurring
income typically consists of month-to-month, quarterly, and annual software program and
upkeep subscriptions, transaction income related to built-in
funds and billing options and month-to-month contracts for advertising know-how
options. Additionally, our re-occurring income consists of income associated to
the sale of selling campaigns and lead technology beneath contractual
preparations with prospects.

•Subscription and Transaction Fees income consists of: (i) recurring month-to-month,
quarterly and annual SaaS subscriptions and software program license and upkeep
charges from the sale of our Business Management, Customer Engagement, and Billing
and Payment options; (ii) fee processing charges based mostly on the transaction
volumes processed by way of our built-in fee options and processing charges
based mostly on transaction volumes for our income cycle administration, continual care
administration and medical insurance clearinghouse options; and (iii) membership
subscriptions and our share of rebates from suppliers generated although group
buying applications.

•Marketing Technology Solutions income consists of: (i) recurring revenues for
managing digital promoting applications on behalf of our prospects together with
web site internet hosting, search engine administration and optimization, social media
administration and weblog automation; and (ii) re-occurring charges paid by service
professionals for client leads generated by our varied platforms.

•Other income consists of: (i) consulting, implementation, coaching and different
skilled companies; (ii) web site growth; (iii) income from varied
enterprise growth partnerships; (iv) occasion earnings; and (v) {hardware} gross sales
associated to our enterprise administration or fee software program options.

Our enterprise advantages from enticing unit economics. Approximately 95% of our
income within the 9 months ended September 30, 2021 and the 12 months ended
December 31, 2020 was recurring or re-occurring, and we maintained a steady
common month-to-month internet professional forma income retention fee of 99% or extra in every of
the final 8 -quarters. We
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imagine the retention and development of income from our present prospects is a
useful measure of the well being of our enterprise and our future development prospects.
Our means to cross promote further services to our present
prospects can enhance buyer engagement with our suite of options and thus
have a constructive affect on our internet professional forma income retention fee. For instance,
we’ve leveraged our land and develop technique to cross promote options to our
present prospects, which has supported our excessive internet professional forma income retention
fee by rising buyer utilization of our options, educating prospects as
to how our platform and synergies can assist their companies and, in flip,
enhancing buyer stickiness.

Our calculation of internet professional forma income retention fee stays in keeping with
prior durations. This fee for any fiscal interval consists of the constructive recurring
and re-occurring income impacts of promoting new options to present prospects
and the adverse impacts of contraction and attrition amongst this set of
prospects. Our internet professional forma income retention fee could fluctuate because of
quite a few components, together with the rising stage of our income base, the extent
of penetration inside our buyer base, growth of options, new
acquisitions and our means to retain our prospects. Our calculation of internet professional
forma income retention fee could differ from equally titled metrics introduced
by different corporations.

We purchase corporations to deepen our aggressive moats in present verticals, and
enter new verticals and geographies. We have acquired 51 corporations since our
inception, together with 9 in 2020 and 4 in 2021 as of October 31, 2021. We have an
established framework for identification, execution, integration, and onboarding
of targets, which leverages our important acquisition expertise and makes use of
inside standards for evaluating acquisition candidates and potential
companies. We have developed and refined our inside standards over time with
our acquisitions, which has helped us to extra readily determine enticing and
complementary targets that may be effectively onboarded. These acquired
options can carry deep business experience and vertically-tailored software program
options that present further sources of development. We imagine that our
methodology, monitor file, and fame for sourcing, evaluating, and
integrating acquisitions positions us as an “acquirer-of-choice” for potential
targets.

Initial Public Offering

On July 6, 2021, we accomplished our IPO which resulted within the issuance and sale of
19,117,648 shares of widespread inventory on the IPO worth of $17.00 producing internet
proceeds of $303.9 million after deducting underwriting reductions. Additionally,
we incurred different IPO associated charges of $6.9 million. On July 29, 2021, the
underwriters of our IPO absolutely exercised their over-allotment possibility, ensuing
within the sale of a further 2.8 million shares on the IPO worth of $17.00 per
share and after underwriter reductions, internet proceeds had been $43.9 million.

Private Placement

On July 6, 2021 we offered 4,411,764 shares of our widespread inventory to entities
affiliated with Silver Lake in a personal placement at a purchase order worth equal to
the IPO worth of $17.00 per share of widespread inventory for internet proceeds of
$75.0 million.


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Impact of COVID-19

The COVID-19 pandemic has triggered economies, companies, markets and communities
across the globe to be disrupted, and in lots of instances, shut-down. In the curiosity
of public well being, many governments closed bodily shops and enterprise areas
deemed to be non-essential, which has triggered rising unemployment ranges and
companies to completely shut. Many SMBs have been adversely impacted by the
COVID-19 pandemic, and consequently, sure of our enterprise operations had been
negatively impacted, whereas others have benefited from prospects shifting to
technology-focused, digital-first enterprise fashions. A McKinsey survey from
October 2020 revealed that world enterprise executives have accelerated the
digitization of their buyer and supply-chain interactions by as a lot as three
to 4 years. Although we can not predict when the United States and world
financial system will absolutely get better from the COVID-19 pandemic, we imagine that our
enterprise is properly positioned to be a partner-of-choice for brand spanking new prospects, to
capitalize on the rising pattern of digital transformation, and to profit from
the revival of the SMB financial system. Nevertheless, we wouldn’t have certainty {that a}
full financial restoration will occur within the close to future, and it’s attainable that
the prolonging of the COVID-19 pandemic will adversely have an effect on our enterprise,
monetary situation, and outcomes of operations. For extra data relating to
the potential affect of the COVID-19 pandemic on our enterprise, discuss with Part II.
Item 1A. “Risk Factors-Risks Related to our Business-The outbreak of the novel
pressure of coronavirus illness has impacted, and a future pandemic, epidemic or
outbreak of an infectious illness within the United States may affect, our
enterprise, monetary situation and outcomes of operations, in addition to the enterprise
or operations of third events with whom we conduct enterprise.”

Impact on Operations

In March 2020, in compliance with the native, state and federal authorities
rules, we transitioned our worldwide workforce and operations to a distant,
work-from-home setting, apart from sure buyer assist
personnel. We rapidly developed a plan of motion, provided our workers with
the mandatory gear and instruments, and whereas we’ve began to return a portion
of our workforce to bodily areas, we’ve retained performance and
practices to have the ability to work remotely as wanted. Additionally, within the second
quarter of 2020 we accomplished a discount in our workforce. We don’t imagine
distant operations or the affect from our discount in workforce have
considerably impacted productiveness of our workforce.

Impact on Financial Performance

The COVID-19 pandemic negatively impacted our monetary efficiency in first
half of 2020 as a result of adversarial affect the pandemic had on sure service SMBs.
However, given the diversification of our enterprise, the monetary affect was
primarily restricted to declines in income attributable to prospects within the
health and wellness and well being companies verticals. In the three months ended
June 30, 2020, our income declined 4.7% sequentially from the three months
ended March 31, 2020, excluding the affect of acquisitions closed within the first
and second quarters of 2020. As our prospects resumed operations all through the
second half of 2020, our income elevated. In the three months ended September
30, 2020, our income grew 11.9% sequentially from the three months ended June
30, 2020, excluding the affect of acquisitions closing within the second and third
quarters of 2020. Our income development has continued because the affect of the pandemic
has lessened and plenty of service SMBs have resumed operations. Our sequential
income development was 3.4% within the three months ended September 30, 2021 in comparison with
the three months ended June 30, 2021, excluding the affect of acquisitions
closed through the third quarter of 2021. In the three months ended September 30,
2021, our income elevated 17.7% in comparison with the three months ended September
30, 2020, excluding the affect of all acquisitions closed subsequent to June 30,
2020.

In the second quarter of 2020 we proactively responded to the numerous
uncertainty across the severity and period of the COVID-19 pandemic, together with
a discount in workforce. Additionally, we lowered different working bills to
preserve present ranges of profitability and money stream. As restrictions began
to raise all through 2020 and 2021 we’ve seen slight enhancements within the sale of
our options to well being service professionals, however we’ve continued to see
impacts from COVID-19 on gross sales to our prospects within the health and wellness
vertical.

Given the impacts of COVID-19 proceed to quickly evolve, the extent to which
COVID-19 could additional affect our monetary situation, outcomes of operations, or
liquidity continues to be unsure and troublesome to foretell. Growth
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developments proceed to differ by vertical and particular options, relying primarily
on variations within the timing and phases of re-openings. Our precedence stays the
security of our workers, prospects and the communities by which we reside and
function. We proceed to stay in shut and common contact with our workers,
prospects, enterprise companions and communities to assist navigate these difficult
occasions.

Key Factors Affecting Our Performance

We imagine that our efficiency and future success rely upon quite a few components
that current important alternatives for us but additionally pose dangers and
challenges. For dialogue of those components, please see “Key Factors Affecting
Our Performance” within the Management’s Discussion and Analysis part of our
Prospectus.

Key Business and Financial Metrics

In addition to our outcomes and measures of efficiency decided in accordance
with GAAP, we imagine the next key enterprise and non-GAAP monetary measures
are helpful in evaluating and evaluating our monetary and operational efficiency
over a number of durations, figuring out developments affecting our enterprise, formulating
enterprise plans and making strategic selections.

Pro Forma Revenue Growth Rate

Pro Forma Revenue Growth Rate is a key efficiency measure that our administration
makes use of to evaluate our consolidated working efficiency over time. Management additionally
makes use of this metric for planning and forecasting functions.

Our year-over-year Pro Forma Revenue Growth Rate is calculated as if all
acquisitions closed as of the tip of the most recent interval had been closed as of the
first day of the prior 12 months interval introduced. In calculating Pro Forma Revenue
Growth Rate, we add the income from acquisitions for the reporting durations
previous to the date of acquisition (together with estimated buy accounting
changes) to our outcomes of operations, after which calculate our income development
fee between the 2 reported durations. As a outcome, Pro Forma Revenue Growth
Rate consists of professional forma income from companies acquired through the interval,
together with income generated during times after we didn’t but personal the acquired
companies. In together with such pre-acquisition income, Pro Forma Revenue Growth
Rate permits us to measure the underlying income development of our enterprise because it
stands as of the tip of the respective interval, which we imagine gives perception
into our then-current operations. Pro Forma Revenue Growth Rate doesn’t
symbolize natural income generated by our enterprise because it stood originally
of the respective interval. Pro Forma Revenue Growth Rates aren’t essentially
indicative of both future outcomes of operations or precise outcomes which may
have been achieved had the acquisitions been consummated on the primary day of the
prior 12 months interval introduced. We imagine that this metric is helpful to traders
in analyzing our monetary and operational efficiency interval over interval and
evaluating the expansion of our enterprise, normalizing for the affect of
acquisitions. This metric is especially helpful to administration as a result of quantity
of acquired entities.

As the financial system has continued to reopen and extra native, state and federal
restrictions have been scaled again, our Pro Forma Revenue Growth Rate has
continued to extend.

Three Months Ended Nine Months Ended
September 30, September 30,
2021

Pro Forma Revenue Growth Rate 20.0 % 20.6 %

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Non-GAAP Financial Measures

Adjusted Gross Profit

Adjusted Gross Profit is a key efficiency measure that our administration makes use of to
assess our operational efficiency, because it represents the outcomes of revenues and
direct prices, that are key elements of our operations. We imagine that this
non-GAAP monetary measure is helpful to traders and different events
in analyzing our monetary efficiency as a result of it displays the gross
profitability of our operations, and excludes the oblique prices related to
our gross sales and advertising, product growth, basic and administrative
actions, and depreciation and amortization, and the affect of our financing
strategies and earnings taxes.

We calculate Adjusted Gross Profit as gross revenue (as outlined under) adjusted
to exclude depreciation and amortization allotted to price of revenues. Adjusted
Gross Profit needs to be seen as a measure of working efficiency that could be a
complement to, and never an alternative choice to, working earnings or loss, internet earnings
or loss and different GAAP measures of earnings (loss) or profitability. The following
desk presents a reconciliation of gross revenue, probably the most immediately comparable
monetary measure calculated in accordance with GAAP, to Adjusted Gross Profit
on a consolidated foundation.

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
(in 1000’s)

Gross revenue(1) $ 80,327 (2) $ 56,062 (3) $ 220,493 (4) $ 148,641 (5)
Depreciation and amortization 5,249 3,609 14,509 10,508
Adjusted gross revenue $ 85,576 $ 59,671 $ 235,002 $ 159,149

(1)Gross revenue is calculated as complete revenues much less price of revenues (unique
of depreciation and amortization), amortization of developed know-how,
amortization of capitalized software program and depreciation expense (allotted to price
of revenues).
(2)For the three months ended September 30, 2021, gross revenue represents complete
revenues of $128.5 million much less price of revenues (unique of depreciation and
amortization) of $43.0 million, amortization of developed know-how of $4.0
million, amortization of capitalized software program of $0.8 million and depreciation
expense (allotted to price of revenues) of $0.4 million.
(3)For the three months ended September 30, 2020, gross revenue represents complete
revenues of $89.2 million much less price of revenues (unique of depreciation and
amortization) of $29.5 million, amortization of developed know-how of $2.6
million, amortization of capitalized software program of $0.6 million and depreciation
expense (allotted to price of revenues) of $0.4 million.
(4)For the 9 months ended September 30, 2021, gross revenue represents complete
revenues of $354.5 million much less price of revenues (unique of depreciation and
amortization) of $119.5 million, amortization of developed know-how of $10.9
million, amortization of capitalized software program of $2.4 million and depreciation
expense (allotted to price of revenues) of $1.2 million.
(5)For the 9 months ended September 30, 2020, gross revenue represents complete
revenues of $245.5 million much less price of revenues (unique of depreciation and
amortization) of $86.4 million, amortization of developed know-how of $7.8
million, amortization of capitalized software program of $1.7 million and depreciation
expense (allotted to price of revenues) of $1.0 million.

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Adjusted EBITDA

Adjusted EBITDA is a key efficiency measure that our administration makes use of to evaluate
our monetary efficiency and can be used for inside planning and forecasting
functions. We imagine that this non-GAAP monetary measure is helpful to traders
and different events in analyzing our monetary efficiency as a result of it
gives a comparable overview of our operations throughout historic durations. In
addition, we imagine that offering Adjusted EBITDA, along with a
reconciliation of internet earnings (loss) to Adjusted EBITDA, helps traders make
comparisons between our firm and different corporations which will have completely different
capital buildings, completely different tax charges, and/or completely different types of worker
compensation.

Adjusted EBITDA is utilized by our administration group as a further measure of our
efficiency for functions of enterprise decision-making, together with managing
expenditures, and evaluating potential acquisitions. Period-to-period
comparisons of Adjusted EBITDA assist our administration determine further developments in
our monetary outcomes that is probably not proven solely by period-to-period
comparisons of internet earnings or earnings from persevering with operations. In addition, we
could use Adjusted EBITDA within the incentive compensation applications relevant to
a few of our workers. Our Management acknowledges that Adjusted EBITDA has
inherent limitations due to the excluded gadgets, and is probably not immediately
similar to equally titled metrics utilized by different corporations.

We calculate Adjusted EBITDA as internet earnings (loss) adjusted to exclude curiosity
and different expense, internet, earnings tax profit, loss on debt extinguishment,
depreciation and amortization, different amortization, acquisition associated prices,
stock-based compensation, and different non-recurring prices. Other amortization
consists of amortization for capitalized contract acquisition prices. Acquisition
associated prices are particular deal-related prices akin to authorized charges, monetary and
tax due diligence, consulting and escrow charges. Other non-recurring prices are
bills akin to system implementation prices and severance associated to deliberate
restructuring actions. Acquisition associated prices and different non-recurring
prices are excluded as they don’t seem to be consultant of our underlying working
efficiency. Adjusted EBITDA needs to be seen as a measure of working
efficiency that could be a complement to, and never an alternative choice to, working earnings
or loss, internet earnings or loss and different GAAP measures of earnings (loss). The
following desk presents a reconciliation of internet loss, probably the most immediately
comparable monetary measure calculated in accordance with GAAP, to Adjusted
EBITDA on a consolidated foundation.

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
(in 1000’s)

Net loss $ (36,906) $ (5,444) $ (77,235) $ (39,031)
Adjusted to exclude the next:
Interest and different expense, internet 5,148 9,756 31,262 30,653
Income tax profit (1,022) (574) (4,182) (2,748)
Loss on debt extinguishment 28,714 – 28,714 –
Depreciation and amortization 25,996 19,152 73,917 55,300
Other amortization 679 477 1,956 1,271
Acquisition associated prices 746 2,249 2,986 4,522
Stock-based compensation 4,745 3,470 16,849 5,297
Other non-recurring prices 938 40 3,654 1,501
Adjusted EBITDA $ 29,038 $ 29,126 $ 77,921 $ 56,765

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Description of Certain Components of Financial Data

Revenues

We derive our income from three major sources that are described intimately
under: (i) Subscription and Transaction Fees, that are primarily recurring
income streams, (ii) Marketing Technology Solutions, which incorporates each
recurring and re-occurring income streams, and (iii) Other income, which
consists primarily from the sale of distinct skilled companies and {hardware}.
Our income recognition insurance policies are mentioned in additional element beneath “Critical
Accounting Policies and Significant Judgments and Estimates.”

Subscription and Transaction Fees: Revenue consists of (i) recurring month-to-month,
quarterly and annual SaaS subscriptions and software program license and upkeep
charges from the sale of our Business Management, Customer Engagement, and Billing
and Payment options; (ii) fee processing charges based mostly on the transaction
volumes processed by way of our built-in fee options and processing charges
based mostly on transaction volumes for our income cycle administration, continual care
administration and medical insurance clearinghouse options; and (iii) membership
subscriptions and our share of rebates from suppliers generated although group
buying applications. Our income from fee processing charges is recorded internet of
bank card and ACH processing and interchange prices within the month the companies
are carried out.

Marketing Technology Solutions: Revenue consists of (i) recurring revenues for
managing digital promoting applications on behalf of our prospects together with
web site internet hosting, search engine administration and optimization, social media
administration and weblog automation; and (ii) re-occurring charges paid by service
professionals for client leads generated by our varied platforms.

Other: Revenue consists of (i) consulting, implementation, coaching and different
skilled companies; (ii) web site growth; (iii) income from varied
enterprise growth partnerships; (iv) occasion earnings; and (v) {hardware} gross sales
associated to our enterprise administration or fee software program options.

Cost of Revenues

Cost of income (unique of depreciation and amortization) consists primarily
of worker prices for our buyer success groups, media expense associated to our
lead technology options, marketing campaign mail expense, contract companies, internet hosting
prices, partnership prices and promotional prices.

We anticipate that price of income as a share of income will fluctuate from
interval to interval based mostly on quite a lot of components, together with the combination of income
between subscription and transaction charges and advertising know-how options,
labor prices, third-party bills and acquisitions. In specific, advertising
know-how options income typically has the next price of income as a
share of income than our subscription and transaction price income. For the
three and 9 months ended September 30, 2021, income from subscription and
transaction charges elevated 52.9% and 49.7%, respectively, in comparison with the three
and 9 months ended September 30, 2020, whereas advertising know-how options
income elevated 29.8% and 41.8%, respectively. To the extent our advertising
know-how options income grows at a quicker fee, whether or not by acquisition or
in any other case, than our subscription and transaction charges income, it may
negatively affect our price of revenues as a share of income.

Sales and Marketing

Sales and advertising expense consist primarily of worker prices for our gross sales
and advertising personnel, together with salaries, advantages, bonuses, and gross sales
commissions. Sales and advertising bills additionally embody promoting prices,
travel-related bills and prices to market and promote our merchandise, direct
buyer acquisition prices, prices associated to conferences and occasions, and
associate/dealer commissions. Software and subscription companies devoted to be used
by our gross sales and advertising group, and outdoors companies contracted for
gross sales and advertising functions are additionally included in gross sales and advertising expense.
Sales commissions which are incremental to acquiring a buyer contract are
deferred and amortized ratably over the estimated interval of our relationship
with that buyer. We anticipate our
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gross sales and advertising bills will enhance on an absolute greenback foundation for the
foreseeable future as we proceed to extend investments to assist our development.
We additionally anticipate that gross sales and advertising bills will enhance as a
share of income within the close to and medium-term.

Product Development

Product growth expense consists primarily of worker prices for our product
growth, together with salaries, advantages, and bonuses. Product growth
bills additionally embody third-party outsourced know-how prices incurred in
growing our platforms, and laptop gear, software program, and subscription
companies devoted to be used by our product growth group. We anticipate
our product growth bills to extend in absolute {dollars} and stay
typically constant as a share of income for the foreseeable future as we
proceed to dedicate substantial assets to develop, enhance and develop the
performance of our options.

General and Administrative

General and administrative expense consists of worker prices for our govt
management, accounting, finance, authorized, human assets, and different
administrative personnel, together with salaries, advantages, bonuses, and stock-based
compensation. General and administrative bills additionally embody exterior authorized,
accounting, and different skilled companies charges, lease, software program and
subscription companies devoted to be used by our basic and administrative
workers, and different basic company bills. We anticipate basic and
administrative expense to extend on an absolute greenback foundation for the
foreseeable future as we proceed to extend investments to assist our development
and because of elevated prices because of turning into a public firm. We
additionally anticipate that basic and administrative bills will enhance as a
share of income within the close to and medium-term. As we’re in a position to additional
scale our operations sooner or later, we’d anticipate that basic and
administrative bills would lower as a share of income.

Depreciation and Amortization

Depreciation and amortization primarily relate to intangible belongings, property
and gear, and capitalized software program.

Interest and Other Expense, internet

Interest and different expense, internet, primarily consists of curiosity expense on
long-term debt. It additionally consists of amortization expense of financing prices and
reductions, in addition to realized and unrealized positive aspects and losses.

Loss on Debt Extinguishment

Loss on debt extinguishment represents the distinction between the quantity paid to
extinguish the debt and the carrying worth of the debt, inclusive of the
write-off of beforehand deferred financing prices.

Income Tax Benefit

We account for earnings taxes in accordance with ASC 740, Income Taxes. ASC 740
requires deferred tax belongings and liabilities to be acknowledged for non permanent
variations between the tax foundation and monetary reporting foundation of belongings and
liabilities, computed on the anticipated tax charges for the durations by which the
belongings or liabilities can be realized, in addition to for the anticipated tax profit
of internet working loss and tax credit score carryforwards. Income taxes are acknowledged
for the quantity of taxes payable by the Company’s company subsidiaries for the
present 12 months and for the affect of deferred tax belongings and liabilities, which
symbolize future tax penalties of occasions which have been acknowledged
otherwise within the monetary statements than for tax functions.

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Results of Operations

The following tables summarize key elements of our outcomes of operations for
the durations introduced. The period-to-period comparisons of our historic
outcomes aren’t essentially indicative of the outcomes which may be anticipated in
the longer term. We function as a single reportable section to mirror the way in which our
chief working choice maker (“CODM”) critiques and assesses the efficiency of
our enterprise. For further data regarding our accounting insurance policies, see
Note 2 to our consolidated monetary statements for the 12 months ended December 31,
2020 included in our Prospectus.

Impact of Acquisitions

The comparability of our working outcomes is impacted by our enterprise
combos and acquisitions. In our dialogue of modifications in our outcomes of
operations for the three and 9 months ended September 30, 2021 in comparison with
the three and 9 months ended September 30, 2020, respectively, we
quantitatively disclose the affect of the expansion in sure of our revenues
the place such discussions could be significant. Expense contributions from our
latest acquisitions for every of the respective interval comparisons typically had been
not individually identifiable as a result of integration of those companies into our
present operations, and as such the dialogue is targeted on main modifications in
elements of prices.

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
(in 1000’s)

Revenues:

Subscription and transaction charges $ 91,788 $ 60,017 $ 252,119 $ 168,413
Marketing know-how options 31,610 24,359 88,974 62,738
Other 5,136 4,775 13,397 14,370
Total revenues 128,534 89,151 354,490 245,521

Operating bills:
Cost of revenues(1) (unique of depreciation and
amortization introduced individually under)

42,958 29,480 119,488 86,372
Sales and advertising(1) 25,156 12,072 67,647 36,305
Product growth(1) 12,711 7,622 35,083 22,282
General and administrative(1) 25,779 17,087 79,796 56,388
Depreciation and amortization 25,996 19,152 73,917 55,300
Total working bills 132,600 85,413 375,931 256,647
Operating loss (4,066) 3,738 (21,441) (11,126)
Interest and different expense, internet (5,148) (9,756) (31,262) (30,653)
Loss on debt extinguishment (28,714) – (28,714) –
Net loss earlier than earnings tax profit (37,928) (6,018) (81,417) (41,779)
Income tax profit 1,022 574 4,182 2,748
Net loss $ (36,906) $ (5,444) $ (77,235) $ (39,031)

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(1)Includes stock-based compensation expense as follows:

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
(in 1000’s)

Cost of revenues $ 173 $ – $ 178 $ –
Sales and advertising 160 – 298 –
Product growth 295 – 437 –
General and administrative 4,117 3,470 15,936 5,297
Total stock-based compensation expense $ 4,745 $ 3,470 $

16,849 $ 5,297

Comparison of the three and 9 months ended September 30, 2021 and 2020

Revenues
Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Revenues:

Subscription and transaction charges $ 91,788 $ 60,017 $ 31,771

52.9 %
Marketing know-how options 31,610 24,359 7,251 29.8 %
Other 5,136 4,775 361 7.6 %
Total revenues $ 128,534 $ 89,151 $ 39,383 44.2 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Revenues:

Subscription and transaction charges $ 252,119 $ 168,413 $ 83,706

49.7 %
Marketing know-how options 88,974 62,738 26,236 41.8 %
Other 13,397 14,370 (973) (6.8) %
Total revenues $ 354,490 $ 245,521 $ 108,969 44.4 %

Revenues elevated $39.4 million or 44.2% and $109.0 million or 44.4% for the
three and 9 months ended September 30, 2021, respectively, as in comparison with the
corresponding durations in 2020. These will increase had been primarily pushed by
will increase in subscription and transaction charges of $31.8 million and $83.7
million, respectively, and advertising know-how options of $7.3 million and
$26.2 million, respectively. The will increase in subscription and transaction charges
associated to development in our buyer base, increased transaction volumes processed
by way of our funds platform and income earned from acquisitions accomplished in
2021 and 2020. Included in revenues for the three and 9 months ended
September 30, 2021 is $20.8 million and $57.5 million of income from
acquisitions closed subsequent to September 30, 2020.
43
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Cost of Revenues
Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Cost of revenues (unique of depreciation and
amortization introduced individually under) $ 42,958 $ 29,480 $ 13,478 45.7 %
Percentage of revenues 33.4 % 33.1 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Cost of revenues (unique of depreciation and
amortization introduced individually under) $ 119,488 $ 86,372 $ 33,116

38.3 %
Percentage of revenues 33.7 % 35.2 %

Cost of revenues elevated by $13.5 million or 45.7% and $33.1 million or 38.3%
for the three and 9 months ended September 30, 2021, respectively, as
in comparison with the corresponding durations in 2020. Increases for the three and 9
months ended September 30, 2021 as in comparison with the corresponding durations in 2020
embody $4.1 million and $9.9 million in personnel and compensation expense,
respectively, $2.1 million and $6.2 million in outsourced companies,
respectively, and different miscellaneous will increase together with, however not restricted to,
promotional expense, marketing campaign mail expense, internet hosting expense and product expense.
As a share of income, price of income was 33.4% and 33.1% for the three
months ended September 30, 2021 and 2020, respectively, and 33.7% and 35.2% for
the 9 months ended September 30, 2021 and 2020, respectively.

Sales and Marketing

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Sales and advertising $ 25,156 $ 12,072 $ 13,084 108.4 %
Percentage of revenues 19.6 % 13.5 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Sales and advertising $ 67,647 $ 36,305 $ 31,342 86.3 %
Percentage of revenues 19.1 % 14.8 %

Sales and advertising bills elevated by $13.1 million or 108.4% and $31.3
million or 86.3% for the three and 9 months ended September 30, 2021,
respectively, as in comparison with the corresponding durations in 2020. These

44
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will increase had been primarily pushed by will increase of $4.4 million and $11.4 million
in personnel and compensation expense, respectively, $2.7 million and $8.3
million in promoting spend, respectively, and $2.6 million and $6.2 million in
associate fee, respectively. As a share of income, gross sales and
advertising was 19.6% and 13.5% for the three months ended September 30, 2021 and
2020, respectively, and 19.1% and 14.8% for the 9 months ended September 30,
2021 and 2020, respectively.

Product Development

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Product growth $ 12,711 $ 7,622 $ 5,089 66.8 %
Percentage of revenues 9.9 % 8.5 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Product growth $ 35,083 $ 22,282 $ 12,801 57.4 %
Percentage of revenues 9.9 % 9.1 %

Product growth bills elevated by $5.1 million or 66.8% and $12.8
million or 57.4% for the three and 9 months ended September 30, 2021,
respectively, as in comparison with the corresponding durations in 2020. These will increase
had been primarily pushed by will increase in product growth associated personnel
bills of $4.9 million and $8.8 million, respectively, resulting from investments in
additions to our know-how groups to assist our varied options in addition to
centralized safety operations, data know-how, and cloud engineering.
As a share of income, product growth bills had been 9.9% and eight.5% for
the three months ended September 30, 2021 and 2020, respectively, and 9.9% and
9.1% for the 9 months ended September 30, 2021 and 2020, respectively.

General and Administrative

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

General and administrative $ 25,779 $ 17,087 $ 8,692 50.9 %
Percentage of revenues 20.1 % 19.2 %

45
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Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

General and administrative $ 79,796 $ 56,388 $ 23,408 41.5 %
Percentage of revenues 22.5 % 23.0 %

General and administrative bills elevated by $8.7 million or 50.9% and $23.4
million or 41.5% for the three and 9 months ended September 30, 2021,
respectively, as in comparison with the corresponding durations in 2020. These will increase
had been primarily pushed by will increase in stock-based compensation expense,
personnel and compensation expense ensuing from elevated headcount, and
skilled charges. For further particulars relating to our stock-based compensation
expense associated to the vesting of sure restricted inventory awards discuss with Note
11 within the notes to the unaudited condensed consolidated monetary statements
included on this Quarterly Report on Form 10-Q. As a share of income,
basic and administrative bills had been 20.1% and 19.2% for the three months
ended September 30, 2021 and 2020, respectively, and 22.5% and 23.0% for the
9 months ended September 30, 2021 and 2020, respectively.

Depreciation and Amortization

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Depreciation and amortization $ 25,996 $ 19,152 $ 6,844

35.7 %
Percentage of revenues 20.2 % 21.5 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Depreciation and amortization $ 73,917 $ 55,300 $ 18,617

33.7 %
Percentage of revenues 20.9 % 22.5 %

Depreciation and amortization elevated by $6.8 million or 35.7% and $18.6
million or 33.7% for the three and 9 months ended September 30, 2021,
respectively, as in comparison with the corresponding durations in 2020. These will increase
had been primarily pushed by will increase of $6.4 million and $17.4 million in
intangible belongings amortization because of intangible asset additions from
our 2020 and 2021 acquisitions, respectively. As a share of income,
depreciation and amortization bills had been 20.2% and 21.5% for the three months
ended September 30, 2021 and 2020, respectively, and 20.9% and 22.5% for the
9 months ended September 30, 2021 and 2020, respectively.

46
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Interest and Other Expense, internet

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Interest and different expense, internet $ 5,148 $ 9,756 $ (4,608)

(47.2) %
Percentage of revenues 4.0 % 10.9 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Interest and different expense, internet $ 31,262 $ 30,653 $ 609

2.0 %
Percentage of revenues 8.8 % 12.5 %

Interest and different expense, internet, elevated (decreased) by ($4.6 million) or
(47.2%) and $0.6 million or 2.0% for the three and 9 months ended September
30, 2021, respectively, as in comparison with the corresponding durations in 2020. The
lower in curiosity expense for the three month interval is because of a decrease
common excellent debt stability and a decrease rate of interest as a result of Refinance.
The enhance in curiosity expense for the 9 month interval is because of an general
increased excellent debt stability previous to the Refinance, partially offset by a
decrease efficient rate of interest for the debt because of the Refinance. As a
share of income, curiosity and different expense had been 4.0% and 10.9% for the
three months ended September 30, 2021 and 2020, respectively, and eight.8% and 12.5%
for the 9 months ended September 30, 2021 and 2020, respectively.

Loss on Debt Extinguishment

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Loss on debt extinguishment $ 28,714 $ – $ 28,714 N.M.
Percentage of revenues 22.3 % – %

47
——————————————————————————–
Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Loss on debt extinguishment $ 28,714 $ – $ 28,714 N.M.
Percentage of revenues 8.1 % – %

_______________

N.M. – Not Meaningful.

Loss on debt extinguishment elevated by $28.7 million for each the three and
9 months ended September 30, 2021 as in comparison with the corresponding durations in
2020. As a results of the Refinance, the Company recorded a loss on debt
extinguishment of roughly $28.7 million. For further data
regarding our loss on debt extinguishment, see Note 9 within the notes to the
unaudited condensed consolidated monetary statements included on this Quarterly
Report on Form 10-Q.

Income Tax Benefit

Three Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Income tax profit $ 1,022 $ 574 $ 448 78.0 %
Percentage of revenues 0.8 % 0.6 %

Nine Months Ended
September 30, Change
2021 2020 Amount %
({dollars} in 1000’s)

Income tax profit $ 4,182 $ 2,748 $ 1,434 52.2 %
Percentage of revenues 1.2 % 1.1 %

Income tax profit elevated by $0.4 million or 78.0% and $1.4 million or 52.2%
for the three and 9 months ended September 30, 2021, respectively, as
in comparison with the corresponding durations in 2020. These will increase had been primarily
pushed by acquisition accounting, exclusion of loss corporations from the quarterly
tax computation, a Jordanian tax vacation, the accrual of estimated present state
taxes and varied different discrete gadgets recorded within the three and 9 months
ended September 30, 2021.

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Liquidity and Capital Resources

To date, our major sources of liquidity have been internet money offered by
working actions, proceeds from most well-liked inventory issuances, proceeds from our
latest IPO, and proceeds from long-term debt. Our major use of liquidity has
been acquisitions of companies. Absent important deterioration of market
situations, we anticipate that working capital necessities, capital expenditures,
acquisitions, debt servicing, and lease obligations can be our principal wants
for liquidity going ahead. During the 9 months ended September 30, 2021, we
have accomplished 4 acquisitions for complete consideration of $185.3 million.
During the 12 months ended December 31, 2020, we accomplished 9 acquisitions for
complete consideration of $415.3 million.

As of September 30, 2021, we had money, money equivalents and restricted money of
$98.3 million, $155.0 million of accessible borrowing capability beneath our New
Revolver (as outlined under) and $385.0 million excellent beneath our New Credit
Facilities (as outlined under). We imagine that our present money, money
equivalents and restricted money, availability beneath our New Credit Facilities,
and our money flows from operations can be ample to fund our working
capital necessities and deliberate capital expenditures, and to service our debt
obligations for at the least the following twelve months. However, our future working
capital necessities will rely upon many components, together with our fee of income
development, the timing and measurement of future acquisitions, and the timing of
introductions of latest services. We anticipate to consummate acquisitions
of complementary companies sooner or later that might require us to hunt
further fairness or debt financing. Additional funds is probably not accessible on
phrases favorable to us, or in any respect. In specific, the widespread COVID-19
pandemic has resulted in, and should proceed to lead to, important disruption
of world monetary markets, decreasing our means to entry capital. If we’re
unable to boost further funds when desired, our enterprise, monetary situation
and outcomes of operations might be adversely affected. See Part II, Item
1A.”Risk Factors.”

Cash Flows

The following desk units forth money stream knowledge for the durations indicated therein:

Nine Months Ended
September 30,
2021 2020
(in 1000’s)

Net money offered by working actions $ 13,673 $ 32,069
Net money utilized in investing actions (194,239)

(130,642)

Net money offered by financing actions 180,514

138,276

Effect of overseas forex trade fee modifications on money 59

37

Net enhance in money, money equivalents and restricted money $ 7 $ 39,740

Cash Flow from Operating Activities

During the 9 months ended September 30, 2021, internet money offered by working
actions consisted of internet lack of $77.2 million, offset by internet non-cash
changes to internet lack of $122.2 million and internet modifications in working belongings
and liabilities of $31.3 million. Non-cash changes primarily consisted of
depreciation and amortization of $73.9 million, loss on debt extinguishment of
$28.7 million and stock-based compensation of $16.8 million. Changes in working
capital through the 9 months ended September 30, 2021 primarily included money
outflows from different non-current belongings of $11.5 million, pay as you go bills and
different present belongings of $11.4 million, accounts receivable, internet of $7.0 million
and accrued bills and different of $6.8 million, partially offset by money inflows
of $7.9 million from deferred income.

49
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During the 9 months ended September 30, 2020, internet money offered by working
actions consisted of internet lack of $39.0 million, offset by internet non-cash
changes to internet lack of $66.2 million, and internet modifications in working belongings
and liabilities of $4.9 million. Non-cash changes primarily consisted of
depreciation and amortization of $55.3 million. Changes in working capital
through the 9 months ended September 30, 2020 primarily included money inflows
from buyer deposits and different long-term liabilities of $8.3 million and
accrued bills and different of $4.3 million, partially offset by money outflows
from different non-current belongings of $6.6 million.

Cash Flow from Investing Activities

During the 9 months ended September 30, 2021, internet money utilized in investing
actions was $194.2 million. The money stream used was pushed primarily by
acquisition of corporations, internet of money acquired, of $183.2 million.

During the 9 months ended September 30, 2020, internet money utilized in investing
actions was $130.6 million. The money stream used was pushed primarily by
acquisition of corporations, internet of money acquired, of $118.0 million.

Cash Flow from Financing Activities

During the 9 months ended September 30, 2021, internet money offered by financing
actions was $180.5 million. The money stream offered was pushed primarily by
internet proceeds from most well-liked and customary inventory issuances of $109.8 million and
$415.9 million, respectively, and proceeds from long-term debt of $496.5
million, offset by funds on long-term debt of $837.1 million. The proceeds
from these financings had been primarily used, after funds on long-term debt, to
fund acquisitions.

During the 9 months ended September 30, 2020, internet money offered by financing
actions was $138.3 million. The money stream offered was pushed primarily by
proceeds from long-term debt of $143.9 million. The proceeds from these
financings had been primarily used to fund acquisitions.

Equity Offerings

For data relating to our IPO, see Note 2 within the notes to the unaudited
condensed consolidated monetary statements included on this Quarterly Report on
Form 10-Q.

Credit Facilities

In August 2019, EverCommerce Solutions Inc. (previously PaySimple, Inc.), as
borrower, and EverCommerce Intermediate Inc. (previously PaySimple Intermediate,
Inc.) entered right into a credit score settlement with varied brokers and lenders (the
“Credit Agreement”). The Credit Agreement offered for (i) a time period mortgage in an
mixture principal quantity of $415.0 million (the “time period mortgage”), (ii) commitments
for delayed draw time period loans as much as an mixture principal quantity of $135.0
million (the “Delayed Draw Term Loans”), (iii) commitments for revolving loans
as much as an mixture principal quantity of $50.0 million (the “Revolver”), and (iv)
a sub-limit of the Revolver accessible for letters of credit score as much as an mixture
face quantity of $10.0 million, or the letters of credit score (the time period mortgage, Delayed
Draw Term Loans and Revolver are referred to herein because the “Credit Facilities”).
In September 2020, the Credit Agreement was amended to offer for added
commitments of Delayed Draw Term Loans in an mixture principal quantity of
$250.0 million on the identical phrases and situations as the unique Delayed Draw
Term Loans beneath the Credit Agreement. Following this modification, the mixture
principal quantity of Delayed Draw Term Loans accessible beneath the Credit Agreement
was $385.0 million.

Simultaneously with the execution of the Credit Agreement, we and varied of our
subsidiaries entered right into a collateral settlement and assure settlement.
Pursuant to the assure settlement, EverCommerce Intermediate Inc. and varied
of our subsidiaries had been guarantors beneath the Credit Agreement. Pursuant to the
collateral settlement, the Credit Facilities had been collateralized by considerably
all our belongings, together with our mental property and the fairness pursuits of
our varied subsidiaries, together with EverCommerce Solutions Inc.
50
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The Credit Agreement that ruled the Credit Facilities contained sure
affirmative and adverse covenants, together with, amongst different issues, restrictions
on indebtedness, issuance of most well-liked fairness pursuits, liens, basic
modifications and asset gross sales, investments, adverse pledges, repurchases of inventory,
dividends and different distributions, and transactions with associates and a
passive holding firm covenant relevant to EverCommerce Intermediate Inc. In
addition, we had been topic to a monetary covenant with respect to the Revolver
whereby, if the mixture principal quantity of revolving loans and letter of
credit score disbursements, along with the quantity of all undrawn letters of credit score
(excluding undrawn letters of credit score as much as $5.0 million and letters of credit score
which are money collateralized) excellent on the final day of any fiscal quarter,
exceeded 35% of the mixture principal quantity of the Revolver, then our First
Lien Leverage Ratio (as outlined within the Credit Agreement) as of the final day of
such fiscal quarter was required to be 8.80 to 1.00 or much less.

New Credit Facilities

In reference to our IPO, on July 6, 2021 we refinanced our present Credit
Facilities and EverCommerce Solutions Inc., as borrower, and EverCommerce
Intermediate Inc. entered into a brand new credit score settlement (the “New Credit
Agreement”) in an mixture principal quantity of $540.0 million, consisting of
(i) an mixture principal quantity of $350.0 million (“New Term Loans”), (ii) a
revolver with a capability of $190.0 million (“New Revolver”), and (iii) a
sub-limit of the New Revolver accessible for letters of credit score as much as an mixture
face quantity of $20.0 million (the New Term Loans and New Revolver are
collectively referred to herein because the “New Credit Facilities”). We used the web
proceeds of the New Term Loans and a portion of the funds accessible beneath our
New Revolver, along with the web proceeds from the IPO, to repay all quantities
excellent beneath our Credit Facilities. These transactions are collectively
referred to herein because the Refinancing. On August 4, 2021, the Company used the
internet proceeds from the sale of the extra shares of widespread inventory following
the train of the underwriters’ over-allotment possibility granted in our IPO to
repay $44.0 million of the quantity excellent beneath the New Revolver.

Simultaneously with the execution of the New Credit Agreement, we and varied of
our subsidiaries entered right into a collateral settlement and assure settlement.
Pursuant to the assure settlement, EverCommerce Intermediate Inc. and varied
of our subsidiaries are guarantors of the obligations beneath the New Credit
Agreement. Pursuant to the collateral settlement, the New Credit Facilities are
secured by liens on considerably all of our belongings, together with our mental
property and the fairness pursuits of our varied subsidiaries, together with
EverCommerce Solutions Inc.

The New Credit Agreement accommodates sure affirmative and adverse covenants,
together with, amongst different issues, restrictions on indebtedness, issuance of
most well-liked fairness pursuits, liens, basic modifications and asset gross sales,
investments, adverse pledges, repurchases of inventory, dividends and different
distributions, and transactions with associates. In addition, we’re topic to
a monetary covenant with respect to the New Revolver whereby, if the mixture
principal quantity of revolving loans (excluding letters of credit score) excellent on
the final day of any fiscal quarter exceeds 35% of the mixture commitments
accessible beneath the New Revolver, then our first lien leverage ratio as of the
final day of such fiscal quarter have to be 7.50 to 1.00 or much less.

Borrowings beneath the New Credit Agreement can be found as ABR or Eurocurrency
borrowings. ABR borrowings beneath the New Credit Agreement accrue curiosity at an
alternate base fee plus an relevant fee, and Eurocurrency borrowings accrue
curiosity at an adjusted LIBOR fee plus an relevant fee. The ABR fee
represents the higher of the prime fee, Federal Reserve Bank of New York fee
plus ½ of 1%, and an adjusted LIBOR fee for a one month curiosity interval plus
1%. The relevant fee for the New Term Loans and the New Revolver loans is 3%
for Eurocurrency borrowings and a pair of% for ABR Borrowings, in every case topic to
change based mostly on our first lien internet leverage ratio.

With respect to ABR borrowings, curiosity funds are due on a quarterly foundation
on the final enterprise day of every March, June, September and December. With
respect to Eurocurrency borrowings, curiosity funds are due on the final
enterprise day of the curiosity interval relevant to the borrowing and, within the case
of a Eurocurrency borrowing with an curiosity interval of greater than three months’
period, every day previous to the final day of such curiosity interval that happens at
intervals of three months’ period after the primary day of such curiosity interval.

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The New Revolver has a variable dedication price, which relies on our first lien
leverage ratio. We anticipate the dedication price to vary from 0.25% to 0.375% per
annum. We are obligated to pay a hard and fast fronting price for letters of credit score of
0.125% every year.

Amounts borrowed beneath the New Revolver could also be repaid and re-borrowed by way of
maturity of the New Revolver in July 2026. The New Term Loans mature in July
2028. New Term Loans could also be repaid or pay as you go however is probably not re-borrowed.

As of September 30, 2021, there was $385.0 million excellent beneath our New
Credit Facilities, comprising $350.0 million associated to the New Term Loans and
$35.0 million associated to the New Revolver. The efficient rate of interest on the
New Term Loans was roughly 4.0% from July 6, 2021 by way of September 30,
2021.

As of September 30, 2021, we had been in compliance with the covenants beneath the New
Credit Agreement.

Recent Acquisitions

On July 8, 2021, the Company acquired 100% of the curiosity of Timely LTD
(“Timely”), a New Zealand reserving and enterprise administration software program firm for
$99.7 million. On July 8, 2021, the Company acquired 100% of the curiosity of PM
Ventures, LLC dba MDTech (“MDTech”), a supplier of digital cost seize
options to physicians through its SaaS-based MD Coder software, for $15.9
million.

Contractual Obligations

There have been no materials modifications to our contractual obligations as of
September 30, 2021 from these disclosed in our Prospectus aside from the
Refinancing with the New Credit Facilities (as outlined above).

Refer to Notes 9 and 15 within the unaudited condensed consolidated monetary
statements included on this Quarterly Report on Form 10-Q and notes thereto for
a dialogue of our debt and working lease obligations, respectively.

Off-Balance Sheet Arrangements

We wouldn’t have nor will we enter into off-balance sheet preparations that had, or
that are moderately more likely to have, a cloth impact on our monetary
situation, revenues or bills, outcomes of operations, liquidity, capital
expenditures or capital assets.

Critical Accounting Policies and Significant Judgments and Estimates

Our monetary statements are ready in accordance with GAAP. The preparation
of our monetary statements in conformity with GAAP requires us to make
estimates and assumptions that have an effect on sure reported quantities of belongings and
liabilities and disclosure of contingent belongings and liabilities on the date of
the monetary statements and the reported quantities of income and bills throughout
the reporting interval.

Our vital accounting insurance policies are described beneath the heading “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies” in our Prospectus and the notes to the
condensed consolidated monetary statements. During the 9 months ended
September 30, 2021, there have been no materials modifications to our vital accounting
insurance policies from these mentioned in our Prospectus.

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Recent Accounting Pronouncements

See Note 2 within the notes to the unaudited condensed consolidated monetary
statements included on this Quarterly Report on Form 10-Q for a dialogue of
accounting pronouncements just lately adopted and just lately issued accounting
pronouncements not but adopted and their potential affect to our monetary
statements.

Election Under the Jumpstart Our Business Startups Act of 2012

The Company at present qualifies as an “rising development firm” beneath the
Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, the
Company is offered the choice to undertake new or revised accounting steering
both (i) throughout the similar durations as these in any other case relevant to non-emerging
development corporations or (ii) throughout the similar time durations as non-public corporations.

The Company has elected to undertake new or revised accounting steering throughout the
similar time interval as non-public corporations, except administration determines it’s
preferable to benefit from early adoption provisions provided throughout the
relevant steering. Our utilization of those transition durations could make it
troublesome to match our monetary statements to these of non-emerging development
corporations and different rising development corporations which have opted out of the
transition durations afforded beneath the JOBS Act.


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