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On Wednesday, Evercore ISI increased its price target for EverCommerce Inc (NASDAQ:EVCM) shares from $10.00 to $11.00, while maintaining an Outperform rating on the stock.
The firm highlighted EverCommerce's strong quarterly performance. Total revenue reached $177.4 million, a 4.3% year-over-year increase, surpassing the Street's estimates of $171.9 million.
Despite adjusted EBITDA margins coming in slightly below expectations at 23.2%, compared to the projected 24.3% and 23.8%, the company's focus on operational changes and growth in the core business was noted.
EverCommerce's full-year revenue guidance remains unchanged, forecasting between $676 million and $696 million, with adjusted EBITDA expected to be $167 million to $176 million.
The company completed the divestiture of its fitness solution during the quarter, which contributed approximately $2.7 million to the quarter's revenue and allowed management to concentrate on the core aspects of the business.
In executive moves, Ryan Siurek is set to take over as the new CFO from Marc Thompson on September 6th. Customer engagement showed positive trends, with those utilizing more than one solution increasing to 87,000, a 16.0% year-over-year growth. Moreover, the number of customers with access to more than one solution grew at an even faster rate of 22.8% year-over-year.
The company's embedded payments segment continued to show strength, with total payment volume (TPV) for the second fiscal quarter growing approximately 6.1% year-over-year to $12.1 billion.
Despite a slight decrease in net retention rate (NRR) to 97%, there was no increased scrutiny around pricing, indicating a strong demand for EverCommerce's software.
EverCommerce also repurchased 2.5 million shares during the period, with $54 million still available for buybacks following the recent approval of a $50 million increase on May 21st.
Marketing solutions are expected to face near-term pressures, but overall, Evercore ISI sees the current valuation as presenting a favorable risk/reward balance, supporting the raised price target.
InvestingPro Insights
Recent data from InvestingPro provides additional context to EverCommerce Inc's (NASDAQ:EVCM) financial landscape. As of the last twelve months leading into Q1 2024, the company has shown a revenue growth of 7.21%, with a gross profit margin of 66.12%, indicating strong profitability on its core operations. Despite a challenging week with a 12.27% decrease in stock price, EverCommerce's liquid assets continue to surpass short-term obligations, suggesting a solid liquidity position.
Two InvestingPro Tips can offer further guidance for potential investors. Firstly, analysts are forecasting net income growth for EverCommerce this year, which could signal improving financial health and potential upside for the stock. Additionally, while four analysts have revised their earnings downwards for the upcoming period, it's worth noting that the company is expected to become profitable within the year. For those seeking more in-depth analysis, InvestingPro features additional tips on EverCommerce, presenting a comprehensive picture of the company's financial metrics and market position.
With a market capitalization of $1.96 billion and a forward-looking perspective, EverCommerce's current trading at a high EBITDA valuation multiple may reflect market expectations for future earnings potential. Interested investors can find more tips and a detailed analysis, including a fair value estimation, on the InvestingPro platform.
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