SEC Info - EverCommerce Inc. - ‘10-K’ for 12/31/23

Incorporated by Reference

II-21

EverCommerce Inc.

Consolidated Balance Sheets

(in thousands, except per share and share amounts)


	December 31,
	2023		2022

Assets
Current assets:
Cash and cash equivalents	$	i 92,609	$	i 92,625
Restricted cash	i 3,570		i 3,199
Accounts receivable, net of allowance for expected credit losses of $ i 6.2 million and $ i 4.7 million at December 31, 2023 and 2022, respectively	i 45,417		i 48,032
Contract assets	i 16,117		i 12,971
Prepaid expenses and other current assets	i 22,434		i 23,760
Total current assets	i 180,147		i 180,587
Property and equipment, net	i 9,734		i 11,930
Capitalized software, net	i 42,511		i 32,554

Other non-current assets	i 42,722		i 46,855
Intangible assets, net	i 315,519		i 405,720
Goodwill	i 927,431		i 914,082
Total assets	$	i 1,518,064	$	i 1,591,728
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	i 8,638	$	i 8,373
Accrued expenses and other	i 66,265		i 56,963
Deferred revenue	i 24,082		i 22,885
Customer deposits	i 12,891		i 11,360
Current maturities of long-term debt	i 5,500		i 5,500

Total current liabilities	i 117,376		i 105,081


Long-term debt, net of current maturities and deferred financing costs	i 526,696		i 530,946

Other non-current liabilities	i 47,956		i 49,008
Total liabilities	i 692,028		i 685,035
Commitments and contingencies (Note 17)	i		i




Stockholders’ equity:
Preferred stock, $ i i 0.00001 / par value, i i 50,000,000 / shares authorized and i i i i no / / / shares issued or outstanding as of December 31, 2023 and 2022	i —		i —
Common stock, $ i i 0.00001 / par value, i i 2,000,000,000 / shares authorized and i i 186,934,031 / and i i 191,447,237 / shares issued and outstanding at December 31, 2023 and 2022, respectively	i 2		i 2
Accumulated other comprehensive loss	( i 8,017)		( i 10,198)
Additional paid-in capital	i 1,454,026		i 1,489,935
Accumulated deficit	( i 619,975)		( i 573,046)
Total stockholders’ equity	i 826,036		i 906,693
Total liabilities and stockholders’ equity	$	i 1,518,064	$	i 1,591,728

The accompanying notes are an integral part of these consolidated financial statements.

II-22

EverCommerce Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share and share amounts)

Year Ended December 31,

2023

2022

2021

Revenues:

Subscription and transaction fees

i 520,234

i 465,345

i 351,831

Marketing technology solutions

i 133,162

i 134,596

i 118,275

Other

i 21,973

i 20,805

i 20,033

Total revenues

i 675,369

i 620,746

i 490,139

Operating expenses:

Cost of revenues (exclusive of depreciation and amortization presented separately below)

i 231,007

i 217,375

i 162,230

Sales and marketing

i 123,561

i 119,059

i 93,789

Product development

i 75,614

i 71,622

i 49,506

General and administrative

i 132,235

i 132,483

i 110,369

Depreciation and amortization

i 104,201

i 110,801

i 101,437

Impairment

i 6,325

i —

Total operating expenses

i 672,943

i 651,340

i 517,331

Operating income (loss)

i 2,426

( i 30,594)

( i 27,192)

Interest and other expense, net

( i 46,407)

( i 33,902)

( i 36,111)

Loss on debt extinguishment

i —

( i 28,714)

Net loss before income tax (expense) benefit

( i 43,981)

( i 64,496)

( i 92,017)

Income tax (expense) benefit

( i 1,639)

i 4,680

i 10,051

Net loss

( i 45,620)

( i 59,816)

( i 81,966)

Other comprehensive gain (loss):

Foreign currency translation gain (loss), net

i 2,181

( i 8,431)

( i 3,313)

Comprehensive loss

( i 43,439)

( i 68,247)

( i 85,279)

Net loss attributable to common stockholders:

Net loss

( i 45,620)

( i 59,816)

( i 81,966)

Adjustments to net loss (see Note 13)

i —

( i 15,105)

Net loss attributable to common stockholders

( i i 45,620 / )

( i i 59,816 / )

( i i 97,071 / )

Basic and diluted net loss per share attributable to common stockholders

( i i 0.24 / )

( i i 0.31 / )

( i i 0.82 / )

Basic and diluted weighted-average shares of common stock outstanding used in computing net loss per share

i i 188,938,892 /

i i 194,624,968 /

i i 117,795,280 /

The accompanying notes are an integral part of these consolidated financial statements.

II-23

EverCommerce Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

(in thousands)

Total (1) Convertible Preferred Stock

Preferred Stock

Common Stock

Additional
Paid-In Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’ Equity

Amount

Balance at January 1, 2021

i 908,310

i —

i 43,074

i —

i 40,564

( i 431,264)

i 1,546

( i 389,154)

Accretion of Series B convertible preferred stock to redemption value

i 15,105

—

( i 15,105)

—

( i 15,105)

Issuance of convertible preferred stock, net

i 109,782

—

Conversion of convertible preferred stock to common stock upon closing of initial public offering

( i 1,033,197)

—

i 125,041

i 2

i 1,033,195

—

i 1,033,197

Issuance of common stock upon closing of initial public offering, net of issuance costs and underwriters fees of $ i 31,278 thousand

—

i 21,882

—

i 340,708

—

i 340,708

Issuance of common stock in a private placement

—

i 4,412

—

i 75,000

—

i 75,000

Rollover equity in consideration of net assets acquired

—

i 45

—

i 726

—

i 726

Stock-based compensation

—

i 571

—

i 22,095

—

i 22,095

Stock option exercises

—

i 359

—

i 1,319

—

i 1,319

Release of valuation allowance related to prior equity transactions

—

i 2,141

—

i 2,141

Foreign currency translation loss, net

—

( i 3,313)

Net loss

—

( i 81,966)

—

( i 81,966)

Balance at December 31, 2021

i —

i 195,384

i 2

i 1,500,643

( i 513,230)

( i 1,767)

i 985,648

(1)Represents the aggregate activity for Series A, B and C convertible preferred stock that was converted as a result of the IPO (See Note 11. Equity).

The accompanying notes are an integral part of these consolidated financial statements.

II-24

EverCommerce Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Cont’d)

(in thousands)

Total Convertible Preferred Stock

Preferred Stock

Common Stock

Additional
Paid-In Capital

Accumulated
Deficit

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’ Equity

Amount

Balance at January 1, 2022

i —

i 195,384

i 2

i 1,500,643

( i 513,230)

( i 1,767)

i 985,648

Issuance of common stock for Employee Stock Purchase Plan

—

i 502

—

i 3,366

—

i 3,366

Common stock issued upon vesting of restricted stock units

—

i 162

—

Stock-based compensation

—

i 26,818

—

i 26,818

Stock option exercises

—

i 351

—

i 1,819

—

i 1,819

Repurchase and retirement of common stock

—

( i 4,952)

—

( i 42,994)

—

( i 42,994)

Release of valuation allowance related to prior equity transactions

—

i 283

—

i 283

Foreign currency translation loss, net

—

( i 8,431)

Net loss

—

( i 59,816)

—

( i 59,816)

Balance at December 31, 2022

i —

i 191,447

i 2

i 1,489,935

( i 573,046)

( i 10,198)

i 906,693

Issuance of common stock for Employee Stock Purchase Plan

—

i 550

—

i 3,550

—

i 3,550

Common stock issued upon vesting of restricted stock units

—

i 1,335

—

Stock-based compensation

—

i 25,559

—

i 25,559

Stock option exercises

—

i 482

—

i 2,603

—

i 2,603

Repurchase and retirement of common stock including taxes

—

( i 6,880)

—

( i 67,621)

—

( i 67,621)

Adoption of ASC 326, Current Expected Credit Losses

—

( i 1,309)

—

( i 1,309)

Foreign currency translation gain, net

—

i 2,181

Net loss

—

( i 45,620)

—

( i 45,620)

Balance at December 31, 2023

i —

i 186,934

i 2

i 1,454,026

( i 619,975)

( i 8,017)

i 826,036

The accompanying notes are an integral part of these consolidated financial statements.

II-25

EverCommerce Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year ended December 31,

2023

2022

2021

Cash flows provided by operating activities:

Net loss

( i 45,620)

( i 59,816)

( i 81,966)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

i 104,201

i 110,801

i 101,437

Stock-based compensation

i 25,559

i 26,818

i 22,095

Deferred taxes

( i 1,657)

( i 7,477)

( i 12,026)

Amortization of deferred financing costs and non-cash interest

i 1,651

i 2,093

i 4,843

Impairment of long lived assets

i 6,325

i —

Bad debt expense

i 6,016

i 5,578

i 2,044

Loss on debt extinguishment

i —

i 28,714

Other non-cash items

i 2,738

i 4,747

i 700

Changes in operating assets and liabilities, net of effects of acquisitions:

Accounts receivable, net

( i 5,011)

( i 13,206)

( i 13,342)

Prepaid expenses and other current assets

( i 2,261)

( i 3,823)

( i 8,009)

Other non-current assets

i 4,183

i 4,937

( i 10,514)

Accounts payable

i 179

( i 1,868)

( i 3,961)

Accrued expenses and other

i 10,423

i 3,076

( i 3,267)

Deferred revenue

i 868

i 160

i 8,646

Other non-current liabilities

( i 2,989)

( i 7,218)

i 2,088

Net cash provided by operating activities

i 104,605

i 64,802

i 37,482

Cash flows used in investing activities:

Purchases of property and equipment

( i 3,037)

( i 2,566)

( i 3,103)

Capitalization of software costs

( i 20,043)

( i 15,514)

( i 11,692)

Acquisition of companies, net of cash acquired

( i 14,940)

i —

( i 364,873)

Net cash used in investing activities

( i 38,020)

( i 18,080)

( i 379,668)

Cash flows (used in) provided by financing activities:

Payments on long-term debt

( i 5,500)

( i 9,500)

( i 1,028,457)

Proceeds from long-term debt

i —

i 850,966

Deferred financing costs

i —

( i 8,135)

Exercise of stock options

i 2,603

i 1,819

i 1,319

Proceeds from preferred stock issuance, net

i —

i 109,782

Proceeds from common stock issuance, net

i —

i 415,708

Proceeds from common stock issuance for Employee Stock Purchase Plan

i 3,550

i 3,366

i —

Repurchase and retirement of common stock

( i 67,283)

( i 42,994)

i —

Net cash (used in) provided by financing activities

( i 66,630)

( i 47,309)

i 341,183

Effect of foreign currency exchange rate changes on cash

i 400

( i 1,148)

i 224

Net increase (decrease) in cash and cash equivalents and restricted cash

i 355

( i 1,735)

( i 779)

Cash and cash equivalents and restricted cash:

Beginning of period

i 95,824

i 97,559

i 98,338

End of period

i 96,179

i 95,824

i 97,559

Supplemental disclosures of cash flow information:

Cash paid for interest

i 46,011

i 30,077

i 30,847

Cash paid for income taxes

i 3,107

i 2,511

i 1,495

Supplemental disclosures of noncash investing and financing activities:

Rollover equity in consideration of net assets acquired

i —

i 726

Accretion of Series B preferred stock to redemption value

i —

i 15,105

The accompanying notes are an integral part of these consolidated financial statements.

II-26


EverCommerce Inc.
Notes to Consolidated Financial Statements

Note 1. Nature of the Business

EverCommerce Inc. and subsidiaries (the “Company” or “EverCommerce”) is a leading provider of integrated software-as-a-service (“SaaS”) solutions or services for service-based small- and medium-sized businesses (“service SMBs”). Our platforms span across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications. Today, the Company serves more than i 708,000 customers across i three core verticals: Home Services; Health Services; and Fitness & Wellness Services. Within the core verticals, customers operate within numerous micro-verticals, ranging from home service professionals, such as construction contractors and home maintenance technicians, to physician practices and therapists in the Health Services industry, to personal trainers and salon owners in the Fitness & Wellness sectors. The platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly nuanced demands, as well as highly complementary solutions that provide fully-integrated offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences. The Company is headquartered in Denver, Colorado, and has operations across the United States, Canada, Jordan, United Kingdom, Australia and New Zealand.

Initial Public Offering

On July 6, 2021, the Company completed its Initial Public Offering (“IPO”), in which the Company issued and sold i 19.1 million shares of its common stock at a public offering price of $ i 17.00 per share (see Note 11. Equity).

Note 2. Summary of Significant Accounting Policies

i i

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements (collectively, the “financial statements”) include the operations of EverCommerce and all wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All material intercompany transactions have been eliminated in consolidation.

/ i

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates are subject to uncertainties due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change. Significant items subject to such estimates include: valuing identified intangible assets and acquired goodwill and establishing estimated useful lives for intangible assets in connection with business combinations; the estimation of the recoverability of goodwill and other intangible assets; income tax uncertainties, including valuation allowance for deferred tax assets and value of any uncertain tax positions; recognizing bad debt expense from expected credit losses; recognizing stock-based compensation expense and estimating standalone selling price, when applicable, for the allocation of transaction price when multiple performance obligations are included in a contract with a customer.

We evaluate our estimates on an ongoing basis. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recognized revenue and expenses that are not readily apparent from other sources. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates and assumptions.

Segment Information

The Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer (“CEO”), evaluates financial performance and allocates resources on a consolidated basis. Accordingly, the Company has determined that it operates in a single reportable segment. See Notes 4. Revenue and 18. Geographic Areas for disaggregated information regarding the Company's revenues and long-lived assets by geography, respectively.

Business Combinations

The results of a business acquired in a business combination are included in the Company’s financial statements from the date of acquisition with the associated purchase price allocated to the identifiable assets and liabilities of the acquired business at their acquisition date fair values. The excess of the purchase price over the amount allocated to the identifiable assets and liabilities, if any, is recorded as goodwill. Based on the nature of the businesses that the Company acquires, goodwill arising from acquisitions typically consists of synergies with previously acquired businesses and economies of scale resulting from centralizing shared service functions. Acquisition-related transaction costs are expensed in the period in which the costs are incurred.

II-27


EverCommerce Inc.
Notes to Consolidated Financial Statements

Determining the fair value of assets acquired and liabilities assumed requires management to make significant judgments and estimates, including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies.

Concentrations of Risk

The Company maintains cash accounts at domestic and foreign financial institutions. At times and for cash maintained at domestic institutions, certain account balances may exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage. The Company has not experienced any losses on such accounts, and management believes that the Company’s risk of loss is remote. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less when acquired to be cash equivalents.

Restricted cash consists of funds that are contractually restricted as to usage or withdrawal. Restricted cash relates to cash collected from our customers’ clients that will be remitted to our customers subsequent to period-end, generally within a time period no longer than one month.

Accounts Receivable, net

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for estimated credit losses inherent in its accounts receivable portfolio. In establishing the expected credit loss, management considers historical losses adjusted to take into account current market conditions and the customers’ financial condition, the amount of receivables in dispute and customer paying patterns. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

Property and Equipment, net

Property and equipment are recorded at cost, net of accumulated depreciation. Property and equipment acquired in purchase accounting are recorded at fair value at the date of acquisition. Expenditures for maintenance and repairs are charged to expense as incurred. i Depreciation is computed using the straight-line method over the following estimated useful lives.


Property and Equipment						Estimated Useful Life

Computer equipment and software						i 3 years
Furniture and fixtures						i 5 years
Leasehold improvements						Lesser of estimated useful life or remaining lease term

Upon disposition, the cost of disposed assets and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to earnings/loss.

/ i

Capitalized Software, net

The Company capitalizes certain costs related to software developed for internal use for which it has no plans to market externally. Internal use software includes the software used for the Company’s SaaS offerings. The Company expenses the costs of developing computer software until the software has reached the application development stage and capitalizes all costs incurred from that time until the software has been placed in service, at which time amortization of the capitalized costs begins. Determination of when the software has reached the application development stage is based upon completion of conceptual designs, evaluation of alternative designs and performance requirements. Costs of major enhancements to internal use software are capitalized while routine maintenance of existing software is charged to product development expense as incurred.

The Company also capitalizes certain costs related to software developed for external use for which it plans to sell to customers, i.e. on-premise software to be installed on customer computers at the customer site. Costs incurred prior to reaching technological feasibility are charged to product development expense as incurred. Capitalization ceases when the product is available for general release to the customers. Such costs have not been material.

The Company amortizes software costs, using the straight-line method, over its estimated useful life of i five years.

II-28


EverCommerce Inc.
Notes to Consolidated Financial Statements

Intangible Assets, net

Intangible assets primarily consist of customer relationships which include government contracts, developed technology, trademarks and trade names and non-compete agreements, which are recorded at acquisition date fair value, less accumulated amortization. The Company determines the appropriate useful life of intangible assets by performing an analysis of expected cash flows of the acquired assets. Developed technology, trademarks and trade names and non-compete agreements acquired through acquisitions are amortized over their estimated useful lives using the straight-line method and customer relationship intangibles are amortized over their estimated useful lives using present value of future cash flows, which approximates the pattern in which the economic benefits are expected to be consumed.

Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying amount of the asset exceeds its estimated fair value. Estimates of expected future cash flows represent management’s best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored.

Impairment of Long-Lived Assets

During the fourth quarter of 2023, the Company evaluated the recoverability of our fitness asset group. As a result of our evaluation, we determined that the estimated fair value of our fitness asset group was insufficient to recover the net carrying value of the asset group resulting in an impairment charge of approximately $ i 5.1 million during the three months ended December 31, 2023, of which $ i 3.1 million related to intangible assets (see Note 19. Subsequent Event). Additionally, the Company ceased use of certain leased premises and subleased certain facilities resulting in an impairment charge of $ i 1.2 million to impair the right-of-use lease assets to their fair value during the year ended December 31, 2023. The impairment charges are recorded in impairment expense on the consolidated statements of operations and comprehensive loss. There were no impairments of long-lived assets during the years ended December 31, 2022 and 2021 other than the abandonment of certain features of its capitalized software as more fully described in Note 8. Capitalized Software.

/ i

Goodwill

Goodwill represents the excess of purchase price over amounts allocated to identifiable assets acquired and liabilities assumed in business combinations. The carrying value of goodwill is evaluated for impairment at least annually or more frequently whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. The Company performs an annual impairment review of its goodwill balance during the fourth quarter or more frequently if business factors indicate. Prior to performing a quantitative evaluation, an assessment of qualitative factors may be performed to determine whether it is more likely than not that the fair value of the reporting unit exceeds its carrying value. In the event the Company determines that it is more likely than not the carrying value of a reporting unit is higher than its estimated fair value, quantitative testing is performed comparing recorded values to estimated fair values. Alternatively, the Company may perform a quantitative assessment for the annual review of recoverability rather than a qualitative assessment. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. We did not incur any goodwill impairment losses in any of the periods presented.

Leases

The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) as of January 1, 2022 and recognized right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet representing the rights and obligations created by those leases and disclosed key information about leasing arrangements. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and is recorded to general and administrative expense on the statements of operations and comprehensive loss. Operating ROU lease assets are included in other non-current assets and operating lease liabilities are included in accrued expenses and other and other non-current liabilities on our consolidated balance sheets.

Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We do not recognize ROU lease assets and lease liabilities for leases with a term of 12 months or less. For all other leases, operating lease assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term. The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to, and the agreement creates enforceable rights and obligations. We also consider whether our service arrangements include the right to control the use of an asset. The ROU lease assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are adjusted for lease incentives.

II-29


EverCommerce Inc.
Notes to Consolidated Financial Statements

The Company’s leases do not provide a readily determinable implicit interest rate and we use our incremental borrowing rate to measure the lease liability and corresponding ROU lease assets. Our incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis adjusted for market conditions and the length of the lease term. Judgement is applied in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral, currency, and economic environment in determining the incremental borrowing rate to apply to each lease.

The Company’s leases may include a non-lease component representing additional services transferred to the Company, such as common area maintenance for real estate. We elected the practical expedient to not separate lease from fixed non-lease components for our real estate leases. We account for the lease and fixed non-lease components of our operating ROU lease assets as a single lease component. The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred.

Future lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index) measured using the index or applicable rate at lease commencement. Subsequent changes in index and other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred. In addition, certain leases include options to extend or terminate a lease, which are recognized when it is reasonably certain that we will exercise that option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees.

The Company does not have any leases classified as finance leases.

Deferred Financing and Credit Facility Costs

Deferred financing costs and discounts on long-term debt are capitalized and netted with long-term debt and amortized over the term of the related debt, using the effective interest method. Costs incurred in connection with the establishment of revolving credit facilities are capitalized and amortized over the term of the related facility period, using the straight-line method. Amortization of debt issuance costs, noncash discounts and other credit facility costs are included in interest expense on the consolidated statements of operations and comprehensive loss.

Series A, B and C Convertible Preferred Stock

The Company accounted for its Series A Convertible Preferred Stock (“Series A”), Series B Convertible Preferred Stock (“Series B”) and Series C Convertible Preferred Stock (“Series C”) shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity. Series A shares, Series B shares and Series C shares were conditionally redeemable preferred stock shares (with redemption rights that were either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) that were classified as Convertible Preferred Stock separate from the stockholders’ equity (deficit) section of the Company’s consolidated balance sheets. The Series A shares and Series C shares were redeemable upon the occurrence of uncertain events not solely within the Company’s control and these uncertain events were deemed not probable. Therefore, Series A shares and Series C shares were presented at fair value at the time of issuance and were not subsequently re-measured. The Company’s Series B shares featured certain redemption rights that were considered to be outside of the Company’s control and these redemption rights were deemed probable of occurrence through March 15, 2021. Accordingly, Series B shares were presented at redemption value through that date.

In connection with the IPO, all of the Company’s then outstanding convertible preferred stock converted into shares of common stock on a one-for-one basis. Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible preferred stock to common stock and additional paid-in capital.

Revenue Recognition

In accordance with U.S. GAAP, the Company performs the following steps in determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its contracts with customers: (i) identification of the contract with a customer; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as each performance obligation is satisfied. The Company assesses the goods or services promised within each contract to determine if they are distinct and represent a performance obligation. The Company then allocates the transaction price to the respective performance obligations, and recognizes revenue when (or as) the performance obligations are satisfied. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services.

The Company maintains three primary categories of revenue sources:

Subscription and Transaction Fees:

Subscription revenue primarily consists of the sale of SaaS offerings or the sale of software licenses. Through the SaaS offerings and

II-30


EverCommerce Inc.
Notes to Consolidated Financial Statements

related support services, customers are granted access to a hosted software application over the contract period, generally ranging from one month to five years, without a contractual right to possession of the software. Alternatively, through the sale of software licenses the customer is provided with a right to use software that provides functionality to the customer on a stand-alone basis, and related support services, which include telephone/technical support, when-and-if available software updates and, in certain instances, hosting services. The software licenses are both perpetual, providing the customer with the right-of-use for an indefinite period, and term, which generally range for a defined period of time from one month to five years. Contracts may contain termination for convenience provisions that allow the Company, customer or both parties the ability to terminate for convenience, either at any time or upon providing a specified notice period, without a penalty. The contract term for accounting purposes is determined to be the period in which parties to the contract have present enforceable rights and obligations, therefore the contract term for accounting purposes may be shorter than the stated term.

•SaaS and related support services: Revenues from the sale of hosted software applications and related support services are generally recognized ratably over the contractual period that the services are delivered, beginning on the date the service is made available to customers. Revenue is recognized ratably because the customer simultaneously receives and consumes the benefits of the services throughout the contract period. Contracts are generally fixed price and may be invoiced on a monthly, quarterly or annual basis, with standard payment terms ranging from 30 to 60 days.

•License and related support services: Revenues from the sale of distinct on-premise licenses are generally recognized at the point in time when the software is made available to the customer to download or use. Revenues from the sale of license related support services are generally recognized ratably over the contractual period that the services are delivered. Within these arrangements, the Company is obligated to make the support services available continuously throughout the contract and the customer simultaneously receives and consumes the benefit of making these services available throughout the contract period. Contracts are generally fixed price and may be invoiced on a monthly, quarterly or annual basis, with standard payment terms ranging from 30 to 60 days. The timing of revenue recognition may differ from the timing of invoicing customers due to the existence of these invoicing practices as well as the requirement to recognize revenue on a relative stand-alone selling price basis.

Transaction fees relate to payment processing and group purchasing program administration services. In fulfillment of payment processing services, the Company partners with third-party merchants and processors who assist in the fulfillment of the Company’s obligations to customers. Payment processing services enable customers to accept payments via credit card, electronic check and other similar methods through facilitation of payment information within the cloud-based applications. Group purchasing program administration services relate to facilitation of group purchasing programs for members through which the Company aggregates member purchasing power to negotiate pricing discounts with suppliers.

•Payment processing services: The Company has concluded that it does not possess the ability to control the underlying services provided by third parties in the fulfillment of its obligations to customers and therefore recognizes revenue net of interchange fees retained by the card issuing financial institutions and fees charged by payment networks. The Company recognizes revenue from these transaction services as the services are provided and ascribes the transaction consideration to the distinct services utilizing the variable consideration allocation exception. Payment for transaction services is received in arrears, typically within one month of when the services have been provided. Transaction services contracts with customers are generally for a term of one month and renew automatically each month.

•Purchasing program administration services: The Company receives rebates from contracted suppliers in exchange for program administration services. Rebates earned are based on a defined percentage of the purchase price of goods and services sold to program members under the contract the Company has negotiated with its suppliers. Administration services contracts with customers are generally for an annual or monthly term and renew automatically upon lapse of the current term.

Marketing Technology Solutions:

Marketing technology solutions consist of digital advertising management and consumer connection services. Digital advertising management services include content creation, search engine optimization and paid media management services. The nature of the performance obligation within advertising management contracts is to stand-ready and provide management services on a continuous basis over the contract term. As a result, revenue associated with advertising management services is recognized on a ratable basis over the service period as the customer simultaneously receives and consumes the benefits of the management services evenly throughout the contract period. The Company typically earns a fixed recurring fee in exchange for advertising management services; however, in certain instances, the transaction consideration to which the Company is entitled may be variable. The Company applies the variable consideration allocation exception to these arrangements. Advertising management services are typically invoiced on a monthly basis either in arrears or in advance. Certain arrangements may be invoiced on a quarterly or annual basis.

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EverCommerce Inc.
Notes to Consolidated Financial Statements

Consumer connection services relate to the sourcing and delivery of service requests from consumers to home service providers. Revenue for consumer connection services may be recognized at either a point-in-time or on an over-time basis as each connection is delivered. Revenue is derived from fees paid by service professionals for consumer matches. Fees associated with each consumer match generated may be either fixed price or variable. The variable consideration, subject to being constrained by Company estimates, is allocated to the connection from which it was derived. Payment for consumer connection services is received in arrears, typically within one month of when the services have been provided. The Company records a contract asset or unbilled receivable for this difference on the consolidated balance sheets. Marketing technology solutions service related contracts are typically short-term with stated contract terms that are less than one year.

Other:

Other revenues generally consist of fees associated with the sale of distinct professional services, either in support of subscription revenue or marketing technology revenue, and hardware. Professional service offerings are typically sold as part of an arrangement for products or services included within subscription or marketing revenue. Professional services associated with subscription revenue generally relate to standard implementation, configuration, installation or training services applied to both SaaS and on-premise deployment models and those services associated with marketing technology are derived from website design, creation or enhancement services. Professional service revenue is recognized over time as the services are performed, as the customer simultaneously receives and consumes the benefit of these services. Professional service contracts are offered at either a fixed or a variable price and may be invoiced in advance or arrears of the services being provided.

Standard payment terms for these arrangements range from 30 to 60 days. Contract terms for other revenue arrangements are generally short-term, with stated contract terms that are less than one year.

Performance Obligations and Standalone Selling Price:

The Company’s contracts at times include the sale of multiple promised goods or services that have been determined to be distinct. The transaction price for contracts with multiple performance obligations is allocated based on the relative stand-alone selling price of each performance obligation within the contract.

The Company’s contracts may include standard warranty or service level provisions that state promised goods and services will perform and operate in all material respects as defined in the respective agreements. The Company has determined that these represent assurance-type warranties, and the Company has not incurred any material costs as a result of such commitments.

Cost to Obtain and Fulfill a Contract:

The Company incurs certain costs to obtain contracts, principally sales, third-party commissions and third-party fulfillment fees, which the Company capitalizes when the liability has been incurred if they are (i) incremental costs of obtaining a contract, (ii) expected to be recovered and (iii) have an expected amortization period that is greater than one year (as the Company has elected the practical expedient to expense any costs to obtain a contract when the liability is incurred if the amortization period of such costs would be one year or less).

Material Rights:

The Company’s contracts with customers may include renewal or other options at stated prices. Determining whether these options provide the customer with a material right and therefore need to be accounted for as separate performance obligations requires judgment. The price of each option must be assessed to determine whether it is reflective of the stand-alone selling price or is reflective of a discount that the customer only received as a result of its prior purchase (a material right).

Other considerations:

The Company has elected a policy to exclude from the transaction price all sales taxes assessed by governmental authorities and as a result, revenue is presented net of tax.

Cost of Revenues

Cost of revenues consists of expenses related to delivering our services and products and providing support to our customers and includes employee costs and related overhead, customer credit card processing fees, targeted mail costs, third party fulfillment costs and software hosting expenses.

Advertising

We expense the cost of advertising as incurred, which is primarily for internet-based advertising to market our products and services. For the years ended December 31, 2023, 2022 and 2021, advertising expenses included in sales and marketing expenses on the

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EverCommerce Inc.
Notes to Consolidated Financial Statements

consolidated statements of operations and comprehensive loss were $ i 23.7 million, $ i 21.4 million and $ i 19.3 million, respectively.

Stock-based Compensation

We measure stock-based compensation awards made to employees and directors based on the estimated grant date fair value of the awards and recognize the compensation expense on a straight-line basis over the applicable service period. We use the Black-Scholes option-pricing model to estimate the fair value of options granted with time-based vesting and market-based vesting terms, respectively, which requires the use of assumptions, including the fair value of the common stock, expected volatility, expected term, risk-free interest rate and expected dividends. The Company does not have a sufficient third-party history of market prices of its common stock, and as such volatility is estimated, using historical volatilities of comparable public entities for the valuation of its stock options. At the point when the Company has sufficient and meaningful trading history of its stock, as is the case for the Company’s 2021 Employee Stock Purchase Plan (the “ESPP”) (see Note 12. Stock-Based Compensation), it will calculate volatility based on its own trading history. The expected term represents the estimated average period of time that the option will remain outstanding. Since the Company does not have sufficient historical data for the exercise of stock options, the expected term is based on the “simplified” method that measures the expected term as the average of the vesting period and the contractual term. Once the Company has sufficient historical data for the exercise of its options it will use Company-specific data. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of the awards. The dividend yield assumption is based on history and the expectation of paying no dividends.

We estimate forfeitures at the date of grant and adjust these estimates to actual forfeitures as they occur. These assumptions involve inherent uncertainties including market conditions and employee behavior that are generally outside of the Company’s control. Stock-based compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest.

Income Taxes

The Company is a C corporation for federal income tax purposes. Deferred taxes are provided whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company's total provision for taxes includes income taxes on the Company's corporate subsidiaries.

The Company records uncertain tax positions based on the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority when it is determined that the tax position will more likely than not be sustained on the basis of the technical merits of the position. When applicable, interest and penalties relating to any such uncertain tax positions are recorded as part of income tax expense.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. The Company includes cumulative foreign currency translation adjustments in comprehensive loss as described below.

Net Loss per Share Attributable to Common Stockholders

The Company computes net loss per share attributable to its common stockholders using the two-class method required for participating securities, which determines net loss per common share and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends, but did not contractually require the holders of such shares to participate in the Company’s losses. As such, net losses for the periods presented were not allocated to these securities. In connection with the IPO, all of the Company’s then outstanding convertible preferred stock converted into shares of common stock on a one-for-one basis. Diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Foreign Currency Translation

The functional currency of our foreign subsidiaries is primarily the local currency in which the entity is located. The financial results of all subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars upon consolidation. Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the current exchange rate in effect as of the date of the consolidated

II-33


EverCommerce Inc.
Notes to Consolidated Financial Statements

balance sheets (the “Spot Rate”). Revenues and expenses are translated at the average exchange rates during the respective periods. Translation adjustments resulting from fluctuations in exchange rates are included in the cumulative currency translation adjustments in accumulated other comprehensive loss in stockholders’ equity. The functional currencies of the Company’s significant foreign operations include the Canadian dollar, Great British Pound, Australian dollar and New Zealand dollar.

For the Company’s subsidiaries that operate primarily in the U.S. dollar, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at the Spot Rate in effect as of the date of the consolidated balance sheets. Non-monetary assets and liabilities are remeasured using historical exchange rates. Income and expense elements are remeasured at the average exchange rates during the respective periods in which the elements are recognized within the consolidated statements of operations and comprehensive loss.

Emerging Growth Company

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use the extended transition period under the JOBS Act until the earlier of the date that it is (i) no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates are discussed below to reflect this election within the Recently Issued Accounting Pronouncements section.

Recently Issued Accounting Pronouncements

We evaluate all ASUs issued by the FASB for consideration of their applicability. ASUs not included in the disclosures in this report were assessed and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.

Accounting pronouncements issued and adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326); Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, which includes the Company’s accounts receivable and contract assets. This updated standard is effective for annual reporting periods beginning after December 15, 2022. The Company adopted this ASU for the year ending December 31, 2023 and it did not have a material impact on the financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the guidance in ASC 805 to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. FASB’s objective in issuing the ASU is to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity and inconsistency related to both the recognition of an acquired contract liability and payment terms’ effects on subsequent revenue recognized by the acquirer. This updated standard is effective for annual reporting periods beginning after December 15, 2022. The Company adopted this ASU on January 1, 2023 and it is prospectively applicable to all business combinations from the adoption date. The adoption of this standard was not material to the Kickserv Acquisition (see Note 3. Acquisitions).

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2024. There was no material impact to our financial statements from the adoption of this standard.

Accounting pronouncements not yet adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting - Improving Reportable Segment Disclosures (Topic 280). The update is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The ASU requires disclosures to include significant segment expenses that are regularly provided to the CODM, an amount and description of the composition of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The

II-34


EverCommerce Inc.
Notes to Consolidated Financial Statements

amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting the amendments in this update on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update is intended to improve transparency of income tax disclosure by requiring consistent categories and greater disaggregation within the rate reconciliation and disaggregation of income taxes paid by jurisdiction. The amendments in this update are effective for annual periods beginning after December 15, 2024 with early adoption permitted. The amendments in this update should be applied on a prospective basis with retrospective application permitted. The Company is currently evaluating the impact of adopting this update on its consolidated financial statements and disclosures.

Note 3. Acquisitions

2023 Acquisition

On August 10, 2023, the Company acquired i 100% of the interest of Norman’s Dojo Inc. (“Kickserv”), a provider of field service management software for home service businesses for approximately $ i 15 million in cash. The acquisition adds offerings for SMBs across diversified portfolios with an opportunity to capture a broader segment of new customers within the Home Services vertical.

We accounted for the acquisition as a business combination under ASC 805, Business Combinations. Accordingly, the Company recorded identifiable assets acquired and liabilities assumed at their acquisition date estimated fair values, with any excess consideration recognized as goodwill. Goodwill primarily represents the value associated with the assembled workforce and expected synergies subsumed into goodwill. The goodwill recognized as a result of the acquisition of Kickserv is not deductible for tax purposes.

We measured the identifiable assets and liabilities assumed at their acquisition date estimated fair values separately from goodwill, which represent Level 3 fair value measurements as defined in ASC 820, Fair Value Measurement. The estimated fair values were determined by management using the assistance of third-party valuation specialists. The valuation methods used to determine the estimated fair value of intangible assets included the income approach—relief from royalty method for developed technology with an estimated useful life of i five years, and the income approach—multi period excess earnings method for customer relationships with an estimated useful life of i 13 years. A number of assumptions and estimates were involved in the application of these valuation methods, including revenue forecasts, expected competition, costs of revenues, obsolescence, tax rates, capital spending, customer attrition rates, discount rates and working capital changes. Cash flow forecasts were generally based on pre-acquisition forecasts coupled with estimated revenues and cost synergies available to a market participant.

Our purchase price allocation for the acquisition is preliminary and subject to revision with provisional amounts related to tax-related and other items. Additional information that existed as of the acquisition date but at the time was unknown to us may become known to us during the remainder of the measurement period, which is not to exceed 12 months from the acquisition date.

The financial results of Kickserv since the closing through December 31, 2023, were not material to our consolidated financial statements, nor were they material to our prior period consolidated results on a pro forma basis.

The following table summarizes the estimated fair values of consideration transferred, assets acquired and liabilities assumed at the acquisition date:


	August 10, 2023
	(in thousands)

Total consideration transferred:
Cash	$	i 14,974

Net assets acquired:
Prepaid expenses and other assets	$	i 51
Intangibles—definite lived	i 3,155
Goodwill	i 12,497
Accounts payable, accrued expenses and other	( i 11)
Deferred tax liability, net	( i 397)
Deferred revenue	( i 274)
Other non-current liabilities	( i 47)
Total net assets acquired	$	i 14,974

/ /

II-35


EverCommerce Inc.
Notes to Consolidated Financial Statements

2021 Acquisitions

During 2021, the Company completed the acquisition of i five unrelated businesses in conjunction with the execution of its long-term plans and objectives in building a service commerce platform supporting the success of SMBs. Total purchase consideration was $ i 367.1 million, including $ i 366.4 million in cash consideration, and $ i 0.7 million of rollover equity.

In connection with these acquisitions, the Company allocated approximately $ i 1.4 million of the consideration to cash and cash equivalents, $ i 0.5 million to property and equipment, $ i 3.4 million to deferred tax asset, $ i 20.9 million to developed technology, $ i 105.9 million to customer relationships, $ i i 5.6 / million to trade name and non-compete agreements, $ i 255.7 million of goodwill, of which $ i 36.1 million was deductible for tax purposes, a liability of $ i 1.6 million to net working capital and $ i 24.7 million to deferred tax liability.

The Company’s consolidated statements of operations and comprehensive loss includes $ i 8.4 million of acquisition-related transaction costs in general and administrative for acquisitions consummated in 2021. For the year ended December 31, 2021 the Company recognized revenue of $ i 21.6 million related to acquisitions consummated in 2021.

Note 4. Revenue

Disaggregation of Revenue

The following tables present a disaggregation of our revenue from contracts with customers by revenue recognition pattern and geographical market:

Year Ended December 31,

2023

2022

2021

(in thousands)

By pattern of recognition (timing of transfer of services):

Point in time

i 61,445

i 56,056

i 49,338

Over time

i 613,924

i 564,690

i 440,801

Total

i 675,369

i 620,746

i 490,139

By Geographical Market:

United States

i 614,782

i 567,041

i 447,232

International

i 60,587

i 53,705

i 42,907

Total

i 675,369

i 620,746

i 490,139

Contract Balances

Supplemental balance sheet information related to contracts from customers is as follows:


	December 31,
	2023		2022
	(in thousands)

Accounts receivables	$	i 45,417	$	i 48,032
Contract assets	$	i 16,117	$	i 12,971
Deferred revenue	$	i 24,082	$	i 22,885
Customer deposits	$	i 12,891	$	i 11,360
Long-term deferred revenue	$	i 2,168	$	i 2,496

Accounts receivable, net: Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by us, when payment is unconditional and only the passage of time is required before payment is due.

Contract assets: Contract assets represent rights to consideration in exchange for products or services that have been transferred (i.e., the performance obligation or portion of the performance obligation has been satisfied), but payment is conditional on something other than the passage of time. These amounts typically relate to contracts that include on-premise licenses and professional services where

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EverCommerce Inc.
Notes to Consolidated Financial Statements

the right to payment is not present until completion of the contract or achievement of specified milestones and the fair value of products or services transferred exceed this constraint.

Contract liabilities: Contract liabilities, or deferred revenue, represent our obligation to transfer products or services to a customer for which consideration has been received in advance of the satisfaction of performance obligations. Long-term deferred revenue is included within other non-current liabilities on the consolidated balance sheets. Revenue recognized from the contract liability balance at December 31, 2022 was $ i 22.9 million for the year ended December 31, 2023. Revenue recognized from the contract liability balance at December 31, 2021 was $ i 23.0 million for the year ended December 31, 2022.

Customer deposits: Customer deposits relate to payments received in advance for contracts, which allow the customer to terminate a contract and receive a pro rata refund for the unused portion of payments received to date.

Accounts Receivable

Activity in our allowance for expected credit losses is as follows for the years ended December 31, 2023 and 2022 (in thousands):


Balance, December 31, 2021	$	i 1,929
Bad debt expense	i 5,578
Write-offs, net of recoveries	( i 2,837)
Balance, December 31, 2022	i 4,670
Beginning balance adjustment due to implementation of the new credit loss standard	i 1,309
Bad debt expense	i 6,016
Write-offs, net of recoveries	( i 5,812)
Balance, December 31, 2023	$	i 6,183

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations within contracts with an original expected contract term that is greater than one year for which fulfillment of the contract has started as of the end of the reporting period. Remaining performance obligations generally relate to those which are stand-ready in nature, as found within the subscription and marketing technology solutions revenue streams. The aggregate amount of transaction consideration allocated to remaining performance obligations as of December 31, 2023 was $ i 20.4 million. The Company expects to recognize approximately i 63% of its remaining performance obligations as revenue within the next year, i 28% of its remaining performance obligations as revenue the subsequent year, i 8% of its remaining performance obligations as revenue in the third year, and the remainder during the two-year period thereafter.

Cost to Obtain and Fulfill a Contract

Assets resulting from costs to obtain contracts are included within prepaid expenses and other current assets for short-term balances and other non-current assets for long-term balances on the Company’s consolidated balance sheets. The costs to obtain contracts are amortized over i five years, which corresponds with the useful life of the related technology. Short-term assets were $ i 8.6 million and $ i 6.6 million at December 31, 2023 and 2022, respectively, and long-term assets were $ i 17.9 million and $ i 15.1 million at December 31, 2023 and 2022, respectively. The Company recorded $ i 5.7 million, $ i 4.3 million and $ i 2.9 million of amortization expense related to assets for the years ended December 31, 2023, 2022 and 2021, respectively, which is included in sales and marketing expense on the consolidated statements of operations and comprehensive loss, as well as $ i 2.3 million, $ i 1.7 million and $ i 1.0 million, respectively, which is included in cost of revenues expense on the consolidated statements of operations and comprehensive loss.

Note 5. Goodwill

Goodwill consisted of the following as of December 31, 2023 and 2022 (in thousands):


Balance, January 1, 2022	$	i 921,416

Measurement period adjustments (1)	( i 573)
Effect of foreign currency exchange rate changes	( i 6,761)
Balance, December 31, 2022	i 914,082
Acquired goodwill	i 12,497

Effect of foreign currency exchange rate changes	i 852
Balance, December 31, 2023	$	i 927,431

(1)The measurement period adjustments of $ i 0.6 million relate to acquisitions consummated during the years ended December 31, 2021.

/ /

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EverCommerce Inc.
Notes to Consolidated Financial Statements

Note 6. Intangible Assets

Intangible assets consisted of the following:

December 31, 2023

Useful
Life

Gross Carrying
Value

Accumulated
Amortization

Net Book
Value

(in thousands)

Customer relationships (1)

i 3- i 20 years

i 605,908

i 336,558

i 269,350

Developed technology (1)

i 2- i 12 years

i 106,482

i 74,717

i 31,765

Trade names (1)

i 3- i 10 years

i 38,627

i 24,293

i 14,334

Non-compete agreements

i 2- i 5 years

i 2,408

i 2,338

i 70

Total

i 753,425

i 437,906

i 315,519

(1)During the quarter ended December 31, 2023, we recognized an impairment charge including $ i 2.7 million of customer relationships, $ i 0.3 million of developed technology and $ i 0.1 million of trade names included in impairment expense on the consolidated statements of operations and comprehensive loss (see Note 2. Summary of Significant Accounting Policies).

December 31, 2022

Useful
Life

Gross Carrying
Value

Accumulated
Amortization

Net Book
Value

(in thousands)

Customer relationships

i 3- i 20 years

i 605,753

i 265,342

i 340,411

Developed technology

i 2- i 12 years

i 105,766

i 59,208

i 46,558

Trade names

i 3- i 10 years

i 38,131

i 19,725

i 18,406

Non-compete agreements

i 2- i 5 years

i 2,402

i 2,057

i 345

Total

i 752,052

i 346,332

i 405,720

Amortization expense was $ i 91.2 million, $ i 101.0 million and $ i 93.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The weighted average remaining useful life of intangible assets acquired is i 8.6 years, i 9.6 years and i 10.5 years for the years ended December 31, 2023, 2022 and 2021, respectively.

In determining the useful life for each category of intangible asset, the Company considered the following: the expected use of the intangible, the longevity of the brand and considerations for obsolescence, demand, competition and other economic factors.

Amortization expense for the Company’s intangible assets are as follows (in thousands):


Year Ended December 31,
2024	$	i 73,869
2025	i 62,258
2026	i 48,709
2027	i 37,650
2028	i 29,888
Thereafter	i 63,145
Total amortization expense for the Company’s intangible assets	$	i 315,519

/ /

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EverCommerce Inc.
Notes to Consolidated Financial Statements

Note 7. Property and Equipment

Property and equipment consisted of the following:


	December 31,
	2023		2022
	(in thousands)

Computer equipment and software	$	i 11,628	$	i 9,327
Furniture and fixtures	i 3,794		i 3,570
Leasehold improvements	i 11,756		i 11,941
Total property and equipment	i 27,178		i 24,838
Less accumulated depreciation	( i 17,444)		( i 12,908)
Property and equipment, net	$	i 9,734	$	i 11,930

Depreciation expense was $ i 4.6 million for the year ended December 31, 2023 and $ i i 4.1 / million for each of the years ended December 31, 2022 and 2021. During the three months ended December 31, 2023, we recorded an impairment charge of $ i 0.2 million to leasehold improvements, which is included in impairment expense on our consolidated statements of operations and comprehensive loss (see Note 2. Summary of Significant Accounting Policies).

Note 8. Capitalized Software

Capitalized software consisted of the following:


	December 31,
	2023		2022
	(in thousands)
Capitalized software	$	i 64,137	$	i 45,872
Less accumulated amortization	( i 21,626)		( i 13,318)
Capitalized software, net	$	i 42,511	$	i 32,554

Amortization expense was $ i 8.4 million, $ i 5.7 million and $ i 3.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. During the ordinary course of business, the Company may determine that certain capitalized features of its software will no longer be used either internally or to deliver value to its customers. During the years ended December 31, 2023, 2022 and 2021, we recorded a charge of $ i 0.6 million, $ i 1.2 million and $ i 0.7 million, respectively, related to capitalized costs associated with abandoned projects, which were included in general and administrative expense on the consolidated statements of operations and comprehensive loss.

During the three months ended December 31, 2023, we recorded an impairment charge of $ i 1.1 million, which is included in impairment expense on our consolidated statements of operations and comprehensive loss (see Note 2. Summary of Significant Accounting Policies).

Note 9. Leases

The Company leases real estate from unrelated parties under operating lease agreements that have initial terms ranging from i one year to i 11 years. Some leases include one or more options to renew, generally at our sole discretion, of five additional years each.

The components of lease expense are as follows:

Year Ended December 31,

2023

2022

(in thousands)

Operating lease cost

i 6,419

i 7,859

Variable lease cost

i 2,046

i 1,495

Short-term lease cost

i 356

i 340

Total lease cost

i 8,821

i 9,694

Included in the consolidated statements of operations and comprehensive loss is total rent expense of $ i i 9.7 / million for the year ended December 31, 2021.

II-39


EverCommerce Inc.
Notes to Consolidated Financial Statements

During the three months ended December 31, 2023, we recorded a $ i 0.6 million impairment charge related to ROU lease assets, which is included in impairment expense on our consolidated statement of operations and comprehensive loss (See Note 2. Summary of Significant Accounting Policies). Additionally, the Company ceased use of certain leased premises and subleased certain facilities resulting in an impairment charge of $ i 1.2 million to impair the right-of-use lease assets to their fair value during the year ended December 31, 2023.

Supplemental cash flow information related to leases is as follows:



	Year Ended December 31,
	2023		2022
	(in thousands)

Cash paid for operating lease liabilities	$	i i 6,218 /	$	i 8,010


Operating lease assets obtained in exchange for operating lease liabilities	$	i i 1,602 /	$	i 772

Supplemental balance sheet information, included in other non-current assets, accrued expenses and other and other non-current liabilities on the consolidated balance sheet, related to leases is as follows:

Year Ended December 31,

2023

2022

(in thousands)

Operating lease right-of-use assets

i 15,861

i 21,756

Current operating lease liabilities

i 3,789

i 5,239

Long-term operating lease liabilities

i 19,400

i 22,500

Total operating lease liabilities

i 23,189

i 27,739

At December 31, 2023 and 2022, the weighted average remaining lease term for operating leases was i 5.75 years and i 6.34 years, and the weighted average discount rate was i 5.1% and i 4.8%, respectively.

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the balance sheet as of December 31, 2023 is as follows (in thousands):


Year ended December 31,
2024	$	i 5,321
2025	i 4,944
2026	i 4,747
2027	i 3,966
2028	i 3,212
Thereafter	i 5,310
Total lease payments	i 27,500
Less: imputed interest	i 4,311
Total present value of lease liabilities	$	i 23,189

II-40


EverCommerce Inc.
Notes to Consolidated Financial Statements

Note 10. Long-Term Debt

Long-term debt consisted of the following:


	December 31,
	2023		2022
	(in thousands)

Term notes with interest payable monthly, interest rate at Adjusted SOFR or Alternative Base Rate (“ABR”), plus an applicable margin of i 3.25% ( i 8.46283% at December 31, 2023) quarterly principal payments of i 0.25% of original principal balance with balloon payment due July 2028	$	i 537,625	$	i 543,125
Revolver with interest payable monthly, interest rate at Adjusted SOFR or ABR, plus an applicable margin of i 3.25% ( i 8.47044% at December 31, 2023), and outstanding balance due July 2026	i —		i —
Principal debt	i 537,625		i 543,125
Deferred financing costs on long-term debt	( i 3,983)		( i 4,900)
Discount on long-term debt	( i 1,446)		( i 1,779)
Total debt	i 532,196		i 536,446
Less current maturities	i 5,500		i 5,500
Long-term portion	$	i 526,696	$	i 530,946

The Company is party to a credit agreement, as amended, that provides for i two term loans for an aggregate principal amount of $ i 550.0 million (“Term Loans”), a revolver with a capacity of $ i 190.0 million (“Revolver”) and a sub-limit of the Revolver available for letters of credit up to an aggregate face amount of $ i 20.0 million. These debt arrangements are collectively referred to herein as the “Credit Facilities”.

Prior to July 1, 2023, borrowings under the Credit Facilities were available as ABR or Eurocurrency borrowings. ABR borrowings under the Credit Facilities accrued interest at an alternate base rate plus an applicable rate, and Eurocurrency borrowings accrued interest at an adjusted LIBOR rate plus an applicable rate. The ABR rate represented the greater of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and an adjusted LIBOR rate for a one month interest period plus i 1%.

Effective as of July 1, 2023, borrowings under the Credit Facilities bear interest at the Company’s option at ABR plus an applicable rate, or at a forward-looking term rate based upon the secured overnight financing rate (“SOFR”), plus (i) (a) with respect to Term Loans, credit spread adjustments of i 0.11448%, i 0.26161%, i 0.42826% and i 0.71513% for interest periods of one, three, six and twelve months, respectively, and (b) with respect to revolving loans, a credit spread adjustment of i 0.0% (“Adjusted SOFR”) plus (ii) an applicable rate, in each case with such applicable rate based on the Company’s first lien net leverage ratio. The ABR represents the highest of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and the Adjusted SOFR for a one month interest period plus i 1%. The applicable rate for the Term Loans and the Revolver is i i 3.0 / % for Adjusted SOFR borrowings and i i 2.0 / % for ABR borrowings, in each case subject to change based on our first lien net leverage ratio.

The Company determines the fair value of long-term debt based on trading prices for its debt if available. As of December 31, 2023, the Company obtained trading prices for the term notes outstanding. However, as such trading prices require significant unobservable inputs to the pricing model, such instruments are classified as Level 2. The fair value amounts were approximately $ i 540.3 million and $ i 531.6 million as of December 31, 2023 and 2022, respectively.

Effective October 31, 2022, the Company entered into an interest rate swap agreement (the “Initial Swap”) in connection with the Company’s Credit Facilities for a notional amount of $ i 200.0 million to convert a portion of the floating component of the Term Loans from a floating rate to a fixed rate. The Initial Swap agreement has a term of i five years with a fixed rate in the agreement of i 4.212%, as amended in June 2023. Additionally, effective March 31, 2023, the Company entered into a second interest rate swap agreement (the “Second Swap” and together with the Initial Swap, the “Swap Agreements”) in connection with the Company’s Credit Facilities for a notional amount of $ i 100.00 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate. The Second Swap agreement has a term of approximately i 4.5 years with a fixed rate in the agreement of i 3.951%, as amended in June 2023.

The Swap Agreements are accounted for as derivatives whereby the fair value of the contract is reported within the consolidated balance sheets, and related gains and losses resulting from changes in the fair value are reported in interest and other expense, net, in the statements of operations and comprehensive loss. As of December 31, 2023 the fair value of the Swap Agreements was a liability

II-41


EverCommerce Inc.
Notes to Consolidated Financial Statements

of $ i 4.9 million which are reported in other non-current liabilities on the consolidated balance sheets, and the associated net losses of $ i 2.0 million and $ i 2.9 million were recognized for the years ended December 31, 2023 and 2022, respectively.

The Company’s Credit Facilities are subject to certain financial and nonfinancial covenants and are secured by substantially all assets of the Company. As of December 31, 2023, the Company was in compliance with all of its covenants.

Aggregate maturities of the Company’s debt are as follows (in thousands):


Year Ended December 31,
2024	$	i 5,500
2025	i 5,500
2026	i 5,500
2027	i 5,500
2028	i 515,625
Thereafter	i —
Total aggregate maturities of the Company’s debt	$	i 537,625

Note 11. Equity

Shares of convertible preferred stock were as follows (in thousands):

Year Ended December 31, 2021

Series B

Series C

Series A

(in thousands)

Convertible Preferred Stock:

Shares outstanding, beginning of period

i 72,226

i —

i 44,958

Issuance of convertible preferred stock, net

i —

i 7,857

i —

Conversion to common stock upon closing of IPO

( i 72,226)

( i 7,857)

( i 44,958)

Shares outstanding, end of period

i —

On May 5, 2021, the Company amended its Certificate of Incorporation (“Third Amended and Restated Certificate of Incorporation”) to increase the number of authorized shares of Preferred Stock from i 125,000,000 shares to i 140,000,000 shares of Preferred Stock, $ i 0.00001 par value per share, of which i 50,000,000 were designated as Series A, i 75,000,000 were designated as Series B and i 15,000,000 were designated as Series C as of such date. Each share of Series A, Series B and Series C could have been converted into common stock at any time, at the option of the holder, based on a prescribed formula set forth in the Company’s Third Amended and Restated Certificate of Incorporation. In the event of a liquidation, dissolution, winding up of the Company or other similar event, liquidation payments would have first been made to the holders of Series B, then to Series C, then to Series A. In May 2021, the Company issued i 7.9 million shares of Series C for proceeds of $ i 109.8 million net of issuance costs.

In accordance with ASC 480, Distinguishing Liabilities from Equity, if the carrying value of redeemable preferred stock is less than its redemption value, redeemable preferred stock shall be accreted to its redemption value if it is probable it will become redeemable. Prior to March 15, 2021, the Company concluded it was probable that the Series B would become redeemable due to the passage of time. However, after that date the Company concluded that it was no longer probable that the Series B would become redeemable due to the increased likelihood of a successful IPO prior to February 23, 2025. The Company’s Series B accruing dividends comprised a component of the redemption value of such stock. The Company recorded the accretion of Series B through March 15, 2021, by increasing its carrying value and recording a corresponding reduction of additional paid-in capital in the amount of $ i 15.1 million for the year ended December 31, 2021.

On July 6, 2021, the Company completed its IPO, in which the Company issued and sold i 19.1 million shares of its common stock at a public offering price of $ i 17.00 per share. After underwriter discounts and commissions, net proceeds from the IPO were $ i 303.9 million. Additionally, the Company incurred other IPO related fees of $ i 6.9 million. On July 29, 2021, the IPO underwriters fully exercised their over-allotment option, resulting in the sale of an additional i 2.8 million shares at the IPO price of $ i 17.00 per share and after underwriter discounts, net proceeds were $ i 43.9 million.

In connection with the IPO, the Company’s outstanding convertible preferred stock converted into shares of common stock on a one-for-one basis. Upon conversion of the convertible preferred stock, the Company reclassified the carrying value of the convertible

II-42


EverCommerce Inc.
Notes to Consolidated Financial Statements

preferred stock to common stock and additional paid-in capital. Immediately prior to the closing of the IPO, the Company filed an amended and restated certificate of incorporation on July 6, 2021 with the Secretary of State of the State of Delaware to authorize the issuance of up to i 2,050,000,000 shares, par value $ i i 0.00001 / per share, consisting of i 2,000,000,000 shares of common stock and i 50,000,000 shares of preferred stock.

On June 14, 2022, our Board approved a stock repurchase program (as subsequently amended, the “Repurchase Program”) with authorization to purchase up to $ i 50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022. On November 7, 2022, our Board approved an expansion of the Repurchase Program with authorization to purchase up to an additional $ i 50.0 million in shares of the Company’s common stock ($ i 100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023. On November 5, 2023, our Board approved an additional expansion of the Repurchase Program with authorization to purchase up to an additional $ i 50.0 million in shares of the Company’s common stock (from $ i 100.0 million to $ i 150.0 million in total) and extended the expiration of the Repurchase Program through December 31, 2024. On December 14, 2023, our Board approved a stock purchase agreement entered into between the Company and Eric Remer, Matt Feierstein, Marc Thompson, Sarah Jordan, Shane Driggers and Evan Berlin, who currently serve as officers of the Company (collectively, the “Selling Stockholders”). On December 19, 2023, as part of our Repurchase Program, the Company repurchased an aggregate of i 1,401,472 shares of common stock from the Selling Stockholders at a price of $ i 9.82 per share, for an aggregate price of $ i 13.8 million. Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs. The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board. The Company expects to fund repurchases with existing cash on hand.

The Company repurchased and retired i 6.9 million shares of common stock pursuant to the Repurchase Program for $ i 67.6 million, including transaction fees and taxes, during the year ended December 31, 2023. As of December 31, 2023, $ i 40.0 million remained available under the Repurchase Program.

Note 12. Stock-Based Compensation

In 2016, the Company adopted the 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan provided for the granting of stock-based awards, including stock options, stock appreciation rights, restricted or unrestricted stock awards, phantom stock, performance awards and other stock-based awards. The 2016 Plan allowed for the granting of stock-based awards through January 17, 2027.

In connection with the IPO, the Company’s Board adopted, and the Company’s stockholders approved, the 2021 Incentive Award Plan (the “2021 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO and, as a result of which, the Company can no longer make awards under the 2016 Plan. The 2021 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The number of shares initially reserved for issuance under the 2021 Plan was i 22,000,000 shares, inclusive of available shares previously reserved for issuance under the 2016 Plan. In addition, the number of shares reserved for issuance under the 2021 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (i) i 3% of the shares outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as determined by the Company’s Board, provided that no more than i 22,000,000 shares may be issued upon the exercise of incentive stock options. Based on the number of outstanding shares of the Company’s common stock as of December 31, 2022, on January 1, 2023 the number of shares reserved for issuance under the 2021 Plan increased by i 5.7 million.

Stock options

During the years ended December 31, 2022 and 2021, the Company granted time-based and performance-based stock options to employees and directors. Time-based options granted under the 2016 Plan vest i 25% after i one year, and then monthly over the next i three years whereas time-based options granted under the 2021 Plan vest i 25% after i one year and then quarterly over the next i three years. Time-based options granted under both the 2016 Plan and the 2021 Plan expire i 10 years from date of grant and carry an exercise price equal to the fair market value at the date of grant as determined by the Company’s Board for options granted under the 2016 Plan and an exercise price equal to the closing price of the Company’s stock at the date of grant for options granted under the 2021 Plan. The Company did not grant stock options in 2023.

The overwhelming majority of performance-based options were granted prior to the IPO and had vesting conditions as follows: i 50% of a holder’s award would have vested upon a change in control or an initial public offering if the per share cash price received in connection with such change in control or the per share offering price in such initial public offering was at least $ i 27.41, and the other i 50% of the holder’s award would have vested upon a change in control or an initial public offering if the per share cash price received in connection with such change in control or the per share offering price in such initial public offering was at least $ i 36.54. The

II-43


EverCommerce Inc.
Notes to Consolidated Financial Statements

performance-based options generally carried an exercise price equal to the fair market value at the date of grant as determined by the Board and expired i 10 years from date of grant. For options outstanding following the IPO, there was a market condition based on the Company achieving a volume weighted average stock price ranging from $ i 27.41 to $ i 36.54 through June 2023, none of which vested. To date, $ i 17.4 million of stock-based compensation expense has been recognized related to the market condition-based options.

The relevant data used to determine the value of the stock options is as follows:

December 31,

2022

2021

Weighted-average risk-free interest rate

i 1.82%

i 0.97%

Expected term in years

i 6.1

Weighted-average expected volatility

i 50%

i 48%

Expected dividends

i 0%

/ i

A summary of stock option activity for the year ended December 31, 2023 is as follows:

Number of
Options

Weighted-Average
Exercise Price

Weighted-Average
Remaining Contractual Term in Years

Aggregate Intrinsic Value

(in thousands except for exercise price and term in years)

Outstanding balance at January 1, 2023

i 16,937

i 9.86

i 7.25

i 3,870

Granted

i —

Exercised

( i 482)

i 5.38

Cancelled

( i 3,118)

i 10.00

Outstanding balance at December 31, 2023

i 13,337

i 10.03

i 6.27

i 22,578

Exercisable at December 31, 2023

i 11,612

i 9.59

i 6.06

i 21,910

The weighted-average grant date fair value of time-based stock options granted was i nil, $ i 5.76 and $ i 8.30 for the years ended December 31, 2023, 2022 and 2021, respectively. The weighted-average modification date fair value of the market condition-based options modified in 2021 was $ i 6.85. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ i 2.2 million, $ i 2.3 million and $ i 2.1 million, respectively. Compensation expense of $ i 11.5 million, $ i 19.3 million and $ i 11.1 million was recognized in stock-based compensation for the years ended December 31, 2023, 2022 and 2021, respectively. The unrecognized compensation expense associated with outstanding time-based stock options at December 31, 2023 was $ i 9.7 million, which is expected to be recognized over a weighted average period of i 1.71 years. There was no remaining unrecognized compensation expense associated with outstanding market condition-based stock options at December 31, 2023.

Restricted Stock Awards

Prior to 2021, the Company granted i 1.6 million shares of funding restricted stock awards (“RSAs”). The unvested awards were subject to modification upon an investment by the equity sponsors, which occurred when the Company issued Series C convertible preferred stock in May 2021 to fund an acquisition (see Note 11. Equity). In connection with these contributions, the RSAs were modified, and approximately i 0.6 million of funding RSAs vested at $ i i 17.00 / per share. Compensation expense of $ i 9.7 million was recognized in general and administrative in the statements of operations and comprehensive loss for the year ended December 31, 2021. In connection with the IPO, all remaining unvested funding awards were cancelled.

Restricted Stock Units

During the years ended December 31, 2023, 2022 and 2021, the Company issued time vesting restricted stock units (“RSUs”). The vesting schedule for awards granted to newly hired employees provides that the awards vest over a i four-year period starting on the grant date, with i 25% of the awards vesting on the i one-year anniversary, and then in equal quarterly installments for the subsequent i three years. The vesting schedule for awards granted to existing employees provides that the awards vest ratably in quarterly installments over a period of i four years. The Company records compensation expense for these awards on a straight-line basis, which approximates the service period. Compensation expense of $ i 12.8 million, $ i 6.0 million and $ i 1.2 million related to these awards was recognized in the statements of operations and comprehensive loss for the years ended December 31, 2023, 2022 and 2021,

II-44


EverCommerce Inc.
Notes to Consolidated Financial Statements

respectively. The unrecognized compensation expense associated with the RSUs at December 31, 2023 was $ i 30.5 million, which is expected to be recognized over a weighted average period of i 2.84 years.

The summary of time vesting restricted stock units activity for the year ended December 31, 2023 is as follows:


	Number of Units	Weighted-Average Grant Date Fair Value
	(in thousands except for fair value)

Unvested, restricted stock units at January 1, 2023	i 2,022	$	i 12.27
Granted	i 3,129	i 9.72
Vested	( i 1,335)	i 11.29
Forfeited	( i 479)	i 10.79
Unvested, restricted stock units at December 31, 2023	i 3,337	$	i 10.48

2021 Employee Stock Purchase Plan

In connection with the IPO, the Company’s Board adopted the 2021 Employee Stock Purchase Plan. The ESPP is designed to allow eligible employees to purchase shares of our common stock, at periodic intervals, with their accumulated payroll deductions. The aggregate number of shares of common stock that were initially reserved for issuance under the ESPP is equal to the sum of (i) i 4,500,000 shares and (ii) an annual increase on the first day of each calendar year beginning in 2022 and ending in and including 2031 equal to the lesser of (A) one percent ( i 1%) of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Board; provided that in no event will more than i 60,000,000 shares of our common stock be available for issuance under the ESPP. Compensation expense of $ i 1.3 million, $ i 1.5 million and $ i 0.1 million related to the ESPP was recognized in the statements of operations and comprehensive loss for the years ended December 31, 2023, 2022 and 2021, respectively.

Stock-based Compensation Expense

Stock-based compensation expense was classified in the accompanying consolidated statements of operations and comprehensive loss as follows:

Year Ended December 31,

2023

2022

2021

(in thousands)

Cost of revenues

i 464

i 373

i 39

Sales and marketing

i 1,672

i 1,503

i 506

Product development

i 2,273

i 1,854

i 551

General and administrative

i 21,150

i 23,088

i 20,999

Total stock-based compensation expense

i 25,559

i 26,818

i 22,095

II-45


EverCommerce Inc.
Notes to Consolidated Financial Statements

Note 13. Net Loss Per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock as of:

Year Ended December 31,

2023

2022

2021

(in thousands except share and per share amounts)

Numerator:

Net loss

( i 45,620)

( i 59,816)

( i 81,966)

Accretion of Series B to redemption value

i —

( i 15,105)

Numerator for basic and diluted EPS – net loss attributable to common stockholders

( i i 45,620 / )

( i i 59,816 / )

( i i 97,071 / )

Denominator:

Denominator for basic and diluted EPS – Weighted-average shares of common stock outstanding used in computing net loss per share

i i 188,938,892 /

i i 194,624,968 /

i i 117,795,280 /

Basic and diluted net loss per share attributable to common stockholders

( i i 0.24 / )

( i i 0.31 / )

( i i 0.82 / )

/ i

The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented due to their anti-dilutive effect:

December 31,

2023

2022

2021

Outstanding stock options and unvested RSUs

i 16,673,982

i 18,959,163

i 16,984,483

Shares of common stock pursuant to ESPP

i 277,656

i 341,389

i 14,755

Total anti-dilutive outstanding potential common stock

i 16,951,638

i 19,300,552

i 16,999,238

/ /

Note 14. Fair Value of Financial Instruments

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.

The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

•Level 1: Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

•Level 2: Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

•Level 3: Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying value of cash and cash equivalents, accounts receivable, contract assets and accounts payable approximate their fair value because of the short-term nature of these instruments. Our interest rate swaps are valued based upon interest yield curves, interest rate volatility and credit spreads. Our interest rate swaps are classified within Level 2 of the fair value hierarchy as all significant inputs are corroborated by observable data.

There were no transfers between fair value measurement levels during the years ended December 31, 2023 and 2022.

II-46


EverCommerce Inc.
Notes to Consolidated Financial Statements

The following table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis:

December 31, 2023

Balance Sheet Classification

Level 1

Level 2

Level 3

Total

(in thousands)

Asset:

Money market

i 764

i —

i 764

Cash equivalents

Liability:

Interest rate swaps

i —

i 4,889

i —

i 4,889

Other non-current liabilities

December 31, 2022

Balance Sheet Classification

Level 1

Level 2

Level 3

Total

(in thousands)

Asset:

Money market

i 6,568

i —

i 6,568

Cash equivalents

Liability:

Interest rate swap

i —

i 2,893

i —

i 2,893

Other non-current liabilities

/ i

The following is a reconciliation of the opening and closing balance for contingent consideration measured at fair value on a recurring basis within Level 3 of the fair value hierarchy during the year ended December 31, 2022 (in thousands):


Opening balance	$	i 675

Fair value adjustments	( i 18)
Amounts settled through payment	( i 657)
Ending balance	$	i —

Note 15. Retirement Plan

Effective January 1, 2009, EverCommerce Inc. adopted a defined contribution savings plan under section 401(k) of the Internal Revenue Code (the “401(k)”). The 401(k) covers substantially all employees who meet minimum age and service requirements and allows participants to contribute a portion of their pre-tax and post-tax annual compensation in accordance with prescribed limits. The Company may make discretionary and/or matching contributions to the 401(k). We began making discretionary employer contributions effective January 1, 2020 equal to i 25% of employee contributions up to i 8% and increased this contribution to i 100% of employee contributions up to i 4% effective January 1, 2022. Employer matching contributions were $ i 5.3 million, $ i 4.8 million and $ i 1.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Note 16. Income Taxes

The components of our net loss before income tax (expense) benefit are as follows:

Year Ended December 31,

2023

2022

2021

(in thousands)

United States

( i 43,177)

( i 59,134)

( i 81,801)

International

( i 804)

( i 5,362)

( i 10,216)

Net loss before income tax (expense) benefit

( i 43,981)

( i 64,496)

( i 92,017)

As of December 31, 2023, a portion of our undistributed earnings from non-U.S. subsidiaries are intended to be indefinitely reinvested in non-U.S. operations, and therefore no U.S. deferred taxes have been recorded. As of December 31, 2023, there was no material unrecognized deferred tax liability related to countries where we are indefinitely reinvested. The remaining undistributed earnings from non-U.S. subsidiaries are not permanently reinvested, however, due to a combination of anticipated tax treatment and losses, no material deferred tax liability exists.

II-47


EverCommerce Inc.
Notes to Consolidated Financial Statements

The components of the provision for income taxes consists of the following:

Year Ended December 31,

2023

2022

2021

(in thousands)

Current:

State

i 1,649

i 1,539

i 801

Foreign

i 1,647

i 1,258

i 1,174

Total current

i 3,296

i 2,797

i 1,975

Deferred:

Federal

( i 4,376)

( i 9,034)

( i 12,747)

State

( i 2,368)

( i 2,743)

( i 2,263)

Foreign

( i 256)

( i 11,235)

( i 3,436)

Change in valuation allowance - United States

i 8,831

i 12,257

i 6,342

Change in valuation allowance - Foreign

( i 3,488)

i 3,278

i 78

Total deferred

( i 1,657)

( i 7,477)

( i 12,026)

Income tax expense (benefit)

i 1,639

( i 4,680)

( i 10,051)

/ i

The Company’s deferred tax assets and liabilities, included in other non-current assets and other non-current liabilities on the consolidated balance sheets, related to temporary differences and operating loss carryforwards were as follows:


	December 31,
	2023		2022
	(in thousands)

Deferred tax assets:
Net operating losses	$	i 35,484	$	i 44,545
163(j) interest limitation	i 27,143		i 23,363
Reserves and accrued expenses	i 8,175		i 7,258
Property and equipment depreciation	i 1,462		i 2,526
Stock-based compensation	i 3,193		i 3,753

Lease liability	i 5,837		i 7,053
Other	i 2,589		i 2,555
Total deferred tax assets	i 83,883		i 91,053
Less: valuation allowance	( i 51,904)		( i 47,756)
Net deferred tax assets	i 31,979		i 43,297
Deferred tax liabilities:
Intangible assets	( i 29,263)		( i 38,080)
Property and equipment depreciation	( i 1,288)		( i 5,056)
Capitalized expenses	( i 4,678)		( i 3,804)
Operating lease right-of-use assets	( i 3,963)		( i 5,434)
Other	( i 364)		( i 614)
Total deferred tax liabilities	( i 39,556)		( i 52,988)
Net deferred tax liabilities	$	( i 7,577)	$	( i 9,691)

II-48


EverCommerce Inc.
Notes to Consolidated Financial Statements

i i

The Company had net operating loss and tax credit carryforwards as of the financial statement date as follows:


	Amount		Expiration Years
	(in thousands)

Net operating losses, federal (Post December 31, 2017)	$	i 23,028	Indefinite
Net operating losses, federal (Pre January 1, 2018)	$	i 2,030	2033 - 2037
Net operating losses, state	$	i 7,481	Various
Net operating losses, foreign	$	i 2,945	2035 - Indefinite
Tax credits, federal	$	i 258	2037
Tax credits, foreign	$	i 254	Various

/ /

Management has not considered future projections of income in this analysis due to the Company’s history of losses. The Company has determined that it is more likely than not that a portion of the deferred tax assets will not be realized and has recorded a valuation allowance of $ i 51.9 million and $ i 47.8 million as of December 31, 2023 and 2022, respectively, against the deferred tax assets. If the Company’s assumptions change and we determine that we will be able to realize these deferred tax assets, the tax benefits related to any reversal of the valuation allowance on deferred tax assets as of December 31, 2023, will be accounted for as follows: $ i 51.5 million will be recognized as a reduction of income tax expense and $ i 0.8 million will be recorded as an increase in equity.

A reconciliation of our valuation allowance on deferred tax assets is as follows:


	Year Ended December 31,
	2023		2022
	(in thousands)

Balance at beginning of period	$	i 47,756	$	i 31,070
Additions to valuation allowance	i 5,342		i 15,648
Additions recorded in acquisition accounting	i 216		i —
Additions recorded as a decrease in equity	i 8		i 1,430
Reductions recorded as an increase in equity	( i 1,418)		( i 392)
Balance at end of period	$	i 51,904	$	i 47,756

The Company files income tax returns in the U.S. federal jurisdiction, Colorado, various other state jurisdictions, Canada, Jordan, the United Kingdom, Australia and New Zealand. The years open for audit vary depending on the tax jurisdiction. In the U.S., the Company's federal tax returns for the years before 2020 (year ended December 31, 2020) are no longer subject to audit. The net operating losses utilized during the open periods from select years prior to 2020 are subject to examination. The foreign jurisdictions statutes vary but are generally four years from assessment of the return.

While management believes we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax regulations. Additionally, the recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently includes subjectivity. Accordingly, additional provision on federal, state and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	Year Ended December 31,
	2023		2022
	(in thousands)

Balance at beginning of period	$	i 364	$	i 134
Gross additions based on tax positions related to the current year	i 167		i 230
Balance at end of period	$	i 531	$	i 364

As of December 31, 2023 and 2022, unrecognized tax benefits of $ i 0.5 million and $ i 0.4 million, respectively, were recorded in other long-term liabilities, which would impact the annual effective tax rate if recognized. The Company recognizes interest and penalties, if

II-49


EverCommerce Inc.
Notes to Consolidated Financial Statements

any, related to unrecognized tax positions in the provision for income taxes in the accompanying consolidated statements of operations and comprehensive loss. The Company does not expect a significant increase or decrease in unrecognized tax benefits over the next twelve months.

The Company, through its foreign subsidiary Alnashmi Digital Marketing, LLC, provides exported technology services, the profits of which are exempt from income tax through December 31, 2025 according to the provisions of the article (9/A/4) of Regulation Number 106 of the 2016 Regulations. So long as the services are exported outside of Jordan, they originate in Jordan and there are no other services within the exported services, the qualifications are met. The approximate dollar value of tax expense related to the tax holiday was $ i 0.2 million and $ i 0.3 million as of December 31, 2023 and 2022, respectively.

During the year ended December 31, 2023, we restructured the ownership of certain intellectual property, which resulted in an income tax benefit.

The income tax benefit differs from the expected tax benefit computed by applying the U.S. federal statutory rate to income before taxes as a result of the following:

Year Ended December 31,

2023

2022

2021

(in thousands, except percentages)

Benefit at U.S. statutory rate

( i 9,236)

i 21.00%

( i 13,544)

i 21.00%

( i 19,324)

i 21.00%

Change in income tax resulting from:

State income benefit, net of federal benefit

( i 810)

i 1.84

( i 852)

i 1.32

( i 1,916)

i 2.08

Stock-based compensation

i 2,513

( i 5.71)

i 2,961

( i 4.59)

i 529

( i 0.57)

Nondeductible compensation

i 876

( i 1.99)

i 163

( i 0.25)

i 2,788

( i 3.03)

Nondeductible transaction costs

i 61

( i 0.14)

i —

i 509

( i 0.55)

Foreign rate differential

i 85

( i 0.19)

( i 129)

i 0.20

( i 613)

i 0.67

Change in valuation allowance

i 5,342

( i 12.15)

i 15,648

( i 24.26)

i 6,420

( i 6.98)

Intellectual property migration

i —

( i 8,805)

i 13.65

i —

US taxation of foreign income

i 1,512

( i 3.44)

i —

Other

i 1,296

( i 2.95)

( i 122)

i 0.19

i 1,556

( i 1.69)

Income tax expense (benefit)

i 1,639

( i 3.73)

( i 4,680)

i 7.26

( i 10,051)

i 10.93

Note 17. Commitments and Contingencies

The Company has non-cancelable contractual purchase obligations incurred in the normal course of business to help deliver our services and products and provide support to our customers. These contracts with vendors primarily relate to software service, targeted mail costs, third party fulfillment costs and software hosting. i Unrecognized future minimum payments due under these agreements are as follows (in thousands):


Year Ended December 31,
2024	$	i 15,710
2025	i 12,544
2026	i 3,745
2027	i 2,625
2028	i 687
Thereafter	i —
Total future minimum payments due	$	i 35,311

From time to time, the Company is involved in various lawsuits and legal proceedings which arise in or outside the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Accruals for loss contingencies are recorded when a loss is probable, and the amount of such loss can be reasonably estimated. An adverse determination in one or more of these pending matters could have an adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

II-50


EverCommerce Inc.
Notes to Consolidated Financial Statements

On January 31, 2024, plaintiff Vladimir Gusinsky Revocable Trust filed a putative class action lawsuit in the Court of Chancery of the State of Delaware against the Company, members of its Board of Directors (the “Board”) and the other parties to its sponsor stockholders agreement, dated June 30, 2021, Providence Strategic Growth II L.P., Providence Strategic Growth II-A L.P., SLA Eclipse Co-Invest, L.P., and SLA CM Eclipse Holdings, L.P. (collectively, the “Sponsor Stockholders”), captioned Vladimir Gusinsky Revocable Trust v. Eric Remer, Penny Balwdin, et. al., Case No. 2024-0077 (Del Ch.). The complaint generally alleges violations of Section 141(a) of the Delaware General Corporation Law (“DGCL”) by providing the Sponsor Stockholders with a veto right over the Board’s ability to hire or fire the Company’s Chief Executive Officer (the “CEO Approval Right”) on the basis that it unlawfully limits the Board’s authority to manage the business and affairs of the Company. The plaintiff seeks declaratory judgment that the CEO Approval Right is invalid and void, other declaratory and equitable relief for the class and/or the Company, attorneys’ and experts’ witness fees and other costs and expenses, and other equitable relief. The Company believes it has meritorious defenses to the claims of the plaintiff and members of the class and any liability for the alleged claims is not currently probable and the potential loss or range of loss is not reasonably estimable.

The Company is party to additional legal proceedings incidental to its business. While the outcome of these additional matters could differ from management’s expectations, the Company does not believe that the resolution of such matters is reasonably likely to have a material effect on its results of operations or financial condition.

The Company assesses the applicability of nexus in jurisdictions in which the Company sells products and services. As of December 31, 2023 and 2022, the Company recorded a liability in the amount of $ i 10.9 million and $ i 11.2 million, respectively, within current liabilities and other long-term liabilities as a provision for sales and use and gross receipts tax. In connection with the Company's accounting for acquisitions, the Company has recorded liabilities and corresponding provisional escrow or indemnity receivables within the purchase price allocations for instances in which the Company is indemnified for tax matters.

Note 18. Geographic Areas

The following table sets forth long-lived assets by geographic area:


	December 31,
	2023		2022
	(in thousands)

United States	$	i 41,134	$	i 36,226
International	$	i 11,111	$	i 8,258

/ /

Note 19. Subsequent Event

On March 13, 2024, the Company entered into definitive sale and purchase agreements to sell our fitness solutions to Jonas Software (see Note 2. Summary of Significant Accounting Policies). The Company expects the transaction to close in two parts. The North American businesses, Club OS and ASF, have closed simultaneous with signing. The international businesses, ClubWise and MyPTHub, are expected to close during the third quarter of 2024 following customary closing conditions and regulatory approvals.

As a result of the definitive sale and purchase agreement, the Company concluded that the transaction will meet the held for sale criteria in the first quarter of 2024. As such, the assets and liabilities of the asset disposal group will be classified as held for sale and presented within other current assets and other current liabilities on our consolidated balance sheets as of March 31, 2024. The Company does not consider the sale of the asset disposal group to be a strategic shift that will have a material effect on its operations and financial results, and therefore it does not qualify for reporting as a discontinued operation.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

None.

Item 9A. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of

II-51

the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of December 31, 2023, our disclosure controls and procedures were not effective as a result of the material weakness in our internal control over financial reporting described below.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and the Company’s overall control environment. Based on this assessment, management concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the existence of the material weakness described below. The material weakness did not result in any identified material misstatements in the current period consolidated financial statements, nor in any of the consolidated financial statements previously reported by us, and there were no changes in previously released financial results.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The scope of our management’s assessment of the effectiveness of internal control over financial reporting includes all of our Company’s consolidated operations.

In connection with the preparation of the financial statements for this Annual Report on Form 10-K, we identified a material weakness related to the lack of properly designed controls over certain of our order to cash revenue accounting processes. Specifically, adequate controls are not in place primarily as a result of (a) the lack of full system integration for certain of our order to cash systems and (b) control deficiencies within the manual controls designed to mitigate that risk.

Our independent registered public accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an “emerging growth company” as defined in the JOBS Act.

Remediation Efforts to Address Material Weakness

We are in the process of remediating the aforementioned material weakness and will continue our efforts to do so until such remediation is complete. While we have taken steps to improve our internal control over financial reporting and have remediated our previously identified material weakness related to certain information technology general controls (“ITGCs”), we maintain a disaggregated information technology infrastructure due to a series of historical business combinations. As a result, we have determined that certain of our systems have not been fully integrated, including within certain revenue cycles of customer order to billing, increasing the number of manual controls necessary for our control environment.

We expect to implement remediation plans for the aforementioned material weakness which may include the following:

•Enhanced system integration within customer order to billing processes within relevant product offerings;

•Investment in information technology systems and resourcing for the integrations noted above;

•Identification and implementation of an enhanced system of manual controls while system integrations are ongoing; and

•Additional training and resourcing associated with manual controls through the enterprise surrounding customer order through billing.

We will monitor the effectiveness of our remediation plans and will make the changes management determines to be appropriate. While we will endeavor to remediate our material weaknesses as soon as practicable, the program of remediation effort may extend beyond the year ending December 31, 2024.

Changes in Internal Control Over Financial Reporting

As previously disclosed in our 10-K for the year ended December 31, 2022, management previously determined a material weakness existed in the Company’s internal control over financial reporting related to ITGCs that support certain of the Company’s product lines within vertical brands’ revenue processes, which were found not to be operating effectively. In response to the identification of this material weakness, we took action to remediate it, including enhancing the control environment, additional training for the control owners, and increased documentation. Management completed its testing of the updated controls and determined that this material weakness in our internal control was remediated as of December 31, 2023. Other than the foregoing, there have been no changes in

II-52

internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

(a) None.

(b) During the three months ended December 31, 2023, no director or officer of the Company i i adopted / or i i terminated / a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

II-53

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Code of Ethics

Our Board has adopted a written Code of Conduct and Ethics applicable to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. We have posted a current copy of our Code of Conduct and Ethics on our Investor Relations website at investors.evercommerce.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics, as well as Nasdaq’s requirement to disclose waivers with respect to directors and executive officers, by posting such information on our website at the address specified above. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K.

Executive Officers and Directors

Information about our Executive Officers and Directors

The following table sets forth the name, age and position(s) of each of our executive officers and directors as of March 14, 2024:

Name

Age

Position(s) with EverCommerce

Principal Employment

Executive Officers

Eric Remer(1)

Chief Executive Officer and Director

Same

Matthew Feierstein

President

Same

Marc Thompson

Chief Financial Officer

Same

Evan Berlin

Chief Operating Officer

Same

Lisa Storey

Chief Legal Officer

Same

Non-Employee Directors

Penny Baldwin-Leonard(3)

Director

Former SVP and Chief Marketing Officer of Qualcomm Incorporated

Kimberly Ellison-Taylor(2)

Director

Chief Executive Officer of KET Solutions, LLC

Mark Hastings(3)

Director

Chief Executive Officer of PSG Equity L.L.C.

John Marquis(1)

Director

Managing Director of PSG Equity L.L.C.

Joseph Osnoss(3)

Director

Managing Partner of Silver Lake

John Rudella

Director

Director of Silver Lake

Richard A. Simonson(2)

Director

Managing Partner of Specie Mesa L.L.C.

Debby Soo(1)

Director

Chief Executive Officer of OpenTable, Inc.

(1)Member of the Nominating and Corporate Governance Committee

(2)Member of the Audit Committee

(3)Member of the Compensation Committee

The remainder of the information required to be disclosed by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 11. Executive Compensation

The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

III-1

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.

III-2

PART IV

Item 15. Exhibits and Financial Statement Schedules

Financial Statements

The following consolidated financial statements are included in Part II, Item 8. of this Annual Report on Form 10‑K:


Index to Consolidated Financial Statements						Page

Report of Independent Registered Public Accounting Firm (PCAOB ID 00 i 42)						III-21
Consolidated Balance Sheets as of December 31, 2023 and 2022						III-22
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021						III-23
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, 2023, 2022 and 2021						III-24
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021						III-26
Notes to Consolidated Financial Statements						III-27

Financial Statement Schedules

All financial statement schedules have been omitted because they are not applicable, not material or because the information required is already included in the consolidated financial statements or the notes thereto.

Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10‑K or are incorporated herein by reference, in each case as indicated below.

Filed/

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Furnished
Herewith

3.1

Amended and Restated Certificate of Incorporation of EverCommerce Inc

8-K

Amended and Restated Bylaws of EverCommerce Inc

3.1

07/09/21

3.2

8-K

Form of Certificate of Common Stock

3.2

07/09/21

4.1

S-1/A

Registration Rights Agreement by and between EverCommerce Inc. and certain security holders of EverCommerce Inc., dated May 7, 2021

4.1

06/23/21

4.2

S-1

Sponsor Stockholders Agreement, dated as of June 30, 2021

4.3

05/28/21

4.3

8-K

Management Stockholders Agreement, dated as of June 30, 2021

10.1

07/09/21

4.4

8-K

Description of Capital Stock

10.2

07/09/21

4.5

10-K

Form of Indemnification Agreement between EverCommerce Inc. and its directors and officers

4.5

03/15/22

10.1#

S-1/A

Amended & Restated 2016 Equity Incentive Plan and related form agreements thereunder

10.1

06/23/21

10.2#

S-1/A

Amended and Restated Restricted Stock Award Agreement by and between the Company and Eric Remer, dated as of August 23, 2019, as amended

10.2

06/23/21

10.3#

S-1/A

Amended and Restated Restricted Stock Award Agreement by and between the Company and Matt Feierstein, dated as of August 23, 2019, as amended

10.3

06/23/21

10.4#

S-1/A

Amended and Restated Restricted Stock Award Agreement by and between the Company and Marc Thompson, dated as of August 23, 2019, as amended

10.4

06/23/21

10.5#

S-1/A

EverCommerce Inc. 2021 Incentive Award Plan

10.5

06/23/21

10.6#

S-1/A

Form of RSU Agreement under the EverCommerce Inc. 2021 Incentive Award Plan

10.6

06/23/21

10.7#

S-1/A

Form of Option Agreement under the EverCommerce Inc. 2021 Incentive Award Plan

10.6.1

06/23/21

10.8#

S-1/A

EverCommerce Inc. 2021 Employee Stock Purchase Plan

10.6.2

06/23/21

10.9#

S-1/A

EverCommerce Inc. Non-Employee Director Compensation Policy

10.7

06/23/21

10.10#

S-1/A

Employment Agreement by and between the Company and Eric Remer, dated July 1, 2021

10.8

06/23/21

10.11#

10-K

Employment Agreement by and between the Company and Matthew Feierstein, dated July 1, 2021

10.11#

03/15/22

10.12#

10-K

Employment Agreement by and between the Company and Marc Thompson, dated July 1, 2021

10.12#

03/15/22

IV-1

10.13#

10-K

PaySimple, Inc. 2008 Equity Incentive Plan

10.13#

03/15/22

10.14#

S-8

333-268321

99.3

11/14/22

10.15

Credit Agreement, dated July 6, 2021

8-K

Amendment No. 1, dated as of November 23, 2021, to the Credit Agreement, dated as of July 6, 2021, among EverCommerce Intermediate Inc., EverCommerce Solutions Inc., Royal Bank of Canada, as administrative agent and collateral agent, and the other parties and lenders party thereto

10.3

07/09/21

10.16.1

8-K

Amendment No. 2, dated as of June 26, 2023, to the Credit Agreement, dated as of July 6, 2021, among EverCommerce Intermediate Inc., EverCommerce Solutions Inc., Royal Bank of Canada, as administrative agent and collateral agent, and the other parties and lenders party thereto

10.1

11/23/21

10.16.2

10-Q

Collateral Agreement, dated July 6, 2021

10.1

08/08/23

10.17

8-K

Guarantee Agreement, dated July 6, 2021

10.4

07/09/21

10.18

8-K

Office Lease by and among EverCommerce Solutions Inc. and BCSP RINO Property LLC, dated June 13, 2019

10.5

07/09/21

10.19^

S-1

List of Subsidiaries of the Registrant

10.13

05/28/21

21.1

23.1

Consent of Ernst & Young LLP

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

97.1

EverCommerce, Inc. Policy for Recovery of Erroneously Awarded Compensation

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

# Denotes management contract or compensatory plan

^ Portions of the exhibit have been omitted as permitted under Item 601(b)(10)(iv) of Regulation S-K.

Item 16. Form 10-K Summary

None.

IV-1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	EVERCOMMERCE INC.

Date: March 14, 2024	By:	/s/ *Eric Remer*
		Eric Remer
		Chief Executive Officer
		(Principal Executive Officer)

Date: March 14, 2024	By:	/s/ *Marc Thompson*
		Marc Thompson
		Chief Financial Officer
		(Principal Financial Officer)

Date: March 14, 2024	By:	/s/ *Ryan H. Siurek*
		Ryan H. Siurek
		Chief Accounting Officer
		(Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signatures

Title

Date

/s/ Eric Remer

Director and Chief Executive Officer (Principal Executive Officer)

Eric Remer

/s/ Marc Thompson

Chief Financial Officer (Principal Financial Officer)

Marc Thompson

/s/ Ryan H. Siurek

Chief Accounting Officer (Principal Accounting Officer)

Ryan H. Siurek

/s/ Penny Baldwin-Leonard

Director

Penny Baldwin-Leonard

/s/ Kimberly Ellison-Taylor

Director

Kimberly Ellison-Taylor

/s/ Mark Hastings

Director

Mark Hastings

/s/ John Marquis

Director

John Marquis

/s/ Joseph Osnoss

Director

Joseph Osnoss

/s/ John Rudella

Director

John Rudella

/s/ Richard A. Simonson

Director

Richard A. Simonson

/s/ Debby Soo

Director