What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-16 · 420 added, 622 removed, 740 unchanged (58% of the section changed)

6 unchanged sentences

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

Notes to Consolidated Financial Statements III- 34

Notes to Consolidated Financial Statements II- 27

Report of Independent Registered Public Accounting Firm

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generally accepted accounting principles.

Adoption of ASU No.

As discussed in Note 9 to the consolidated financial statements, the Company changed its method of accounting for leases in the year ended December 31, 2022 due to the adoption of ASU No.

Basis for Opinion

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Restricted cash 3,570 3,199

Accounts receivable, net of allowance for doubtful accounts of $ 4.7 million and $ 1.9 million at December 31, 2022 and 2021, respectively

Accounts receivable, net of allowance for expected credit losses of $ 6.2 million and $ 4.7 million at December 31, 2023 and 2022, respectively

45,417 48,032

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Total operating expenses 672,943 651,340 517,331

Operating loss ( 30,594 ) ( 27,192 ) ( 22,039 )

Operating income (loss)

2,426 ( 30,594 ) ( 27,192 )

Interest and other expense, net ( 46,407 ) ( 33,902 ) ( 36,111 )

Loss on debt extinguishment — — ( 28,714 )

Net loss before income tax benefit ( 64,496 ) ( 92,017 ) ( 63,584 )

Income tax benefit 4,680 10,051 3,630

Net loss ( 59,816 ) ( 81,966 ) ( 59,954 )

Other comprehensive loss:

Foreign currency translation gains (losses), net ( 8,431 ) ( 3,313 ) 1,204

Net loss before income tax (expense) benefit

( 43,981 ) ( 64,496 ) ( 92,017 )

Income tax (expense) benefit

( 1,639 ) 4,680 10,051

( 45,620 ) ( 59,816 ) ( 81,966 )

Other comprehensive gain (loss):

Foreign currency translation gain (loss), net

2,181 ( 8,431 ) ( 3,313 )

Comprehensive loss

$ ( 43,439 ) $ ( 68,247 ) $ ( 85,279 )

Net loss attributable to common stockholders:

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EverCommerce Inc.

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

(in thousands)

Series B Convertible Preferred Stock Series C Convertible Preferred Stock Series A Convertible Preferred Stock Total Convertible Preferred Stock Preferred Stock Common Stock Additional

Paid-In Capital Accumulated

Deficit Accumulated Other

Comprehensive Income Total

Stockholders’ Equity (Deficit)

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance at January 1, 2020

55,759 $ 527,065 — $ — 44,958 $ 163,264 $ 690,329 — $ — 40,731 $ — $ 96,129 $ ( 371,310 ) $ 342 $ ( 274,839 )

Issuance of Series B convertible preferred stock 16,467 150,250 — — — — 150,250 — — — — — — — —

Equity issuance costs — ( 80 ) — — — — ( 80 ) — — — — — — — —

Rollover equity in consideration of net assets acquired — — — — — — — — — 222 — 1,319 — — 1,319

Stock-based compensation — — — — — — — — — 2,037 — 10,721 — — 10,721

Stock option exercises — — — — — — — — — 84 — 206 — — 206

Foreign currency translation gains, net — — — — — — — — — — — — — 1,204 1,204

Accretion of Series B convertible preferred stock to redemption value — 67,811 — — — — 67,811 — — — — ( 67,811 ) — — ( 67,811 )

Net loss — — — — — — — — — — — — ( 59,954 ) — ( 59,954 )

Balance at December 31, 2020 72,226 $ 745,046 — $ — 44,958 $ 163,264 $ 908,310 — $ — 43,074 $ — $ 40,564 $ ( 431,264 ) $ 1,546 $ ( 389,154 )

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

EverCommerce Inc.

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

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

(in thousands)

Series B Convertible Preferred Stock Series C Convertible Preferred Stock Series A Convertible Preferred Stock Total Convertible Preferred Stock Preferred Stock Common Stock Additional

Total (1) Convertible Preferred Stock

Preferred Stock Common Stock Additional

Paid-In Capital Accumulated

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Comprehensive

Stockholders’ Equity (Deficit)

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Stockholders’ Equity

Shares Amount Shares Amount

Balance at January 1, 2021

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Release of valuation allowance related to prior equity transactions — — — — — 2,141 — — 2,141

Foreign currency translation losses, net — — — — — — — — — — — — — ( 3,313 ) ( 3,313 )

Foreign currency translation loss, net — — — — — — — ( 3,313 ) ( 3,313 )

Net loss — — — — — — ( 81,966 ) — ( 81,966 )

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$ — — $ — 195,384 $ 2 $ 1,500,643 $ ( 513,230 ) $ ( 1,767 ) $ 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.

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

EverCommerce Inc.

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

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

(in thousands)

Series B Convertible Preferred Stock Series C Convertible Preferred Stock Series A Convertible Preferred Stock Total Convertible Preferred Stock Preferred Stock Common Stock Additional

Total Convertible Preferred Stock Preferred Stock Common Stock Additional

Paid-In Capital Accumulated

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Comprehensive

Stockholders’ Equity (Deficit)

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Stockholders’ Equity

Shares Amount Shares Amount

Balance at January 1, 2022 $ — — $ — 195,384 $ 2 $ 1,500,643 $ ( 513,230 ) $ ( 1,767 ) $ 985,648

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Release of valuation allowance related to prior equity transactions — — — — — 283 — — 283

Foreign currency translation losses, net — — — — — — — — — — — — — ( 8,431 ) ( 8,431 )

Foreign currency translation loss, net — — — — — — — ( 8,431 ) ( 8,431 )

Net loss — — — — — — ( 59,816 ) — ( 59,816 )

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$ — — $ — 191,447 $ 2 $ 1,489,935 $ ( 573,046 ) $ ( 10,198 ) $ 906,693

Issuance of common stock for Employee Stock Purchase Plan $ — — — 550 — 3,550 — — 3,550

Common stock issued upon vesting of restricted stock units — — — 1,335 — — — — —

Stock-based compensation — — — — — 25,559 — — 25,559

Stock option exercises — — — 482 — 2,603 — — 2,603

Repurchase and retirement of common stock including taxes — — — ( 6,880 ) — ( 67,621 ) — — ( 67,621 )

Adoption of ASC 326, Current Expected Credit Losses

— — — — — — ( 1,309 ) — ( 1,309 )

Foreign currency translation gain, net

— — — — — — — 2,181 2,181

Net loss — — — — — — ( 45,620 ) — ( 45,620 )

Balance at December 31, 2023

$ — — $ — 186,934 $ 2 $ 1,454,026 $ ( 619,975 ) $ ( 8,017 ) $ 826,036

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

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Amortization of deferred financing costs and non-cash interest 1,651 2,093 4,843

Impairment of long lived assets

Bad debt expense 6,016 5,578 2,044

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Capitalization of software costs ( 20,043 ) ( 15,514 ) ( 11,692 )

Payment of contingent consideration — — ( 2,000 )

Acquisition of companies, net of cash acquired ( 14,940 ) — ( 364,873 )

Net cash used in investing activities ( 38,020 ) ( 18,080 ) ( 379,668 )

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

EverCommerce Inc.

Consolidated Statements of Cash Flows (Cont’d)

(in thousands)

Year ended December 31,

Cash flows (used in) provided by financing activities:

Payments on long-term debt

( 5,500 ) ( 9,500 ) ( 1,028,457 )

Cash flows provided by (used in) financing activities:

Payments on debt ( 9,500 ) ( 1,028,457 ) ( 55,891 )

Proceeds from long-term debt — — 850,966

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Repurchase and retirement of common stock ( 67,283 ) ( 42,994 ) —

Net cash provided by (used in) financing activities ( 47,309 ) 341,183 401,850

Net cash (used in) provided by financing activities

( 66,630 ) ( 47,309 ) 341,183

Effect of foreign currency exchange rate changes on cash 400 ( 1,148 ) 224

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

355 ( 1,735 ) ( 779 )

Cash and cash equivalents and restricted cash:

Beginning of year 97,559 98,338 57,344

End of year $ 95,824 $ 97,559 $ 98,338

Year ended December 31,

Beginning of period

95,824 97,559 98,338

End of period

$ 96,179 $ 95,824 $ 97,559

Supplemental disclosures of cash flow information:

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Rollover equity in consideration of net assets acquired $ — $ — $ 726

Fair value of earnout in consideration of net assets acquired $ — $ — $ 3,471

Accretion of Series B preferred stock to redemption value $ — $ — $ 15,105

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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 platform spans across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications.

Our platforms span across the full lifecycle of interactions between consumers and service professionals with vertical-specific applications.

Today, the Company serves more than 708,000 customers across three core verticals:

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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 complete end-to-end offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.

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 19.1 million shares of its common stock at a public offering price of $ 17.00 per share.

After underwriter discounts and commissions, net proceeds from the IPO were $ 303.9 million.

Additionally, the Company incurred other IPO related fees of $ 6.9 million.

On July 29, 2021, the IPO underwriters fully exercised their over-allotment option, resulting in the sale of an additional 2.8 million shares at the IPO price of $ 17.00 per share and after underwriter discounts, net proceeds were $ 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 (see Note 11).

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.

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 2,050,000,000 shares, par value $ 0.00001 per share, consisting of 2,000,000,000 shares of common stock and 50,000,000 shares of preferred stock.

Summary of Significant Accounting Policies

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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”), as detailed in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”).

All material intercompany transactions have been eliminated upon consolidation.

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.

Segment Information

The Company’s Chief Operating Decision Maker (“CODM”), its Chief Executive Officer (“CEO”), reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial

EverCommerce Inc.

Notes to Consolidated Financial Statements

Accordingly, the Company has determined that it operates in a single reportable segment.

Since the Company operates in one segment, all required financial segment information can be found in the financial statements.

See Notes 4 and 18 for disaggregated information regarding the Company's revenues and long-lived assets by geography, respectively.

All material intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with 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 and affect items such as valuing identified intangible assets and acquired goodwill and establishing estimated useful lives for intangible assets in connection with business combinations, performing impairment assessments of intangible assets and goodwill, determining the appropriate valuation allowance for deferred tax assets and value of any uncertain tax positions, recognizing stock-based compensation expense and estimating consideration subject to constraint on revenue recognition.

On an ongoing basis, management evaluates these estimates, judgments and assumptions.

Estimates are based on historical and anticipated results and trends, and on various other assumptions the Company believes are reasonable under the circumstances, including assumptions as to future events.

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 expens e 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 any such differences may be material to the Company’s financial statements.

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.

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.

The Company allocates purchase price to the identifiable assets and liabilities of the acquired business at their acquisition date fair values.

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.

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.

Acquisition-related transaction costs are expensed in the period in which the costs are incurred.

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

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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.

EverCommerce Inc.

Notes to Consolidated Financial Statements

Accounts Receivable, net

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio.

In establishing the required allowance, 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.

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.

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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.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, such as amortizing intangible assets, internally developed software and property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset 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.

The Company did not identify any indicators of impairment for the years ended December 31, 2022, 2021 and 2020, other than the abandonment of certain features of its capitalized software as more fully described in Note 8.

Capitalized Software, net

In accordance with ASC Subtopic 350-40, Internal Use Software , the Company capitalizes certain costs related to software developed for internal use for which it has no plans to market externally.

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.

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Costs of major enhancements to internal use software are capitalized while routine maintenance of existing software is charged to product development expense as incurred.

In accordance with ASC Topic 985, Software , the Company also capitalizes certain costs related to software developed for external use for which it plans to sell to customers, i.e.

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.

Once technological feasibility is reached, additional development costs

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 five years .

EverCommerce Inc.

Notes to Consolidated Financial Statements

incurred are capitalized.

Technological feasibility is demonstrated by the completion of the product design and when all high-risk development issues have been resolved.

Capitalization ceases when the product is available for general release to the customers.

The Company amortizes both internal use and external software costs, using the straight-line method, over its estimated useful life of five years .

Intangible Assets, net

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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.

Goodwill represents the amount by which the purchase price exceeds the fair value of identifiable tangible and intangible assets and liabilities acquired in a business combination.

The Company accounts for its goodwill under ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”).

Goodwill acquired in a business combination and determined to have an indefinite useful life is not amortized, but instead is tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate that the carrying value might not be fully recoverable.

For goodwill, impairment is assessed at the reporting unit level.

A reporting unit is defined as an operating segment or a component of an operating segment to the extent discrete financial information is available that is reviewed by segment management.

For the annual goodwill impairment assessment, the Company has the option of assessing qualitative factors to determine whether it is more likely than not that the carrying amount of a reporting unit exceeds its fair value, or performing a quantitative test.

Qualitative factors considered in the assessment include industry and market considerations, the competitive environment, overall financial performance, changing cost factors such as labor costs and other factors specific to a reporting unit such as change in management or key personnel.

If the Company elects to perform the qualitative assessment and concludes that it is more likely than not that the fair value of the reporting unit is more than its related carrying amount, then goodwill is not considered impaired and the quantitative impairment test is not necessary.

If the Company’s qualitative assessment concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company will perform a quantitative test, which compares the estimated fair value of the reporting unit to its carrying amount.

If the estimated fair value of the reporting unit exceeds the carrying amount of the net assets assigned to that reporting unit, goodwill is not impaired.

However, if the estimated fair value of the reporting unit is lower than the carrying amount of the net assets assigned to the reporting unit, an impairment charge is recognized equal to the excess of the carrying amount over the estimated fair value.

Besides goodwill, the Company has no other intangible assets with indefinite lives.

The Company performed annual qualitative goodwill impairment assessments in 2022, 2021 and 2020 and concluded that it was more likely than not that the fair value of the reporting units were more than their related carrying amounts and as such did not identify any goodwill impairment during the years ended December 31, 2022, 2021 and 2020.

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 $ 5.1 million during the three months ended December 31, 2023, of which $ 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 $ 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.

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.

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.

EverCommerce Inc.

Notes to Consolidated Financial Statements

The Company adopted 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 and recorded to general and administrative in the statement of operations and comprehensive loss.

The Company also considers whether its service arrangements include the right to control the use of an asset.

The Company used its incremental borrowing rate to determine the present value of lease payments, as the Company’s leases do not have a readily determinable implicit discount rate.

The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term an amount in a similar economic environment.

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 does not recognize ROU assets and lease liabilities for leases with a term of twelve months or less.

For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease.

The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives.

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.

The Company made an accounting policy election to not separate non-lease components from lease components for its real estate leases;

rather the Company will account for each lease component and the non-lease components associated with that lease component as a single lease component.

However, the non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred.

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 contain termination options, where the rights to terminate are held by either the Company, the lessor, or both parties.

These options to extend or terminate a lease are included in the lease terms when it is reasonably certain that the Company will exercise that option.

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.

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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 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’

EverCommerce Inc.

Notes to Consolidated Financial Statements

equity (deficit) section of the Company’s consolidated balance sheets.

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 .

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.

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Revenue Recognition

The Company recognizes revenue in accordance with ASU No.

2014-09, Revenue from Contracts with Customers (“ASC 606”).

In accordance with ASC 606, 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:

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;

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and (v) recognition of revenue when, or as each performance obligation is satisfied.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract to determine if they are distinct and represent a performance obligation.

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.

Revenue is generated from the following sources:

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 S aaS offerings and related support services, customers are granted access to a hosted software application over the contract period without a contractual right to possession of the software.

Through the S aaS offerings and

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 and term.

Under term license arrangements, the customer is provided the right to use the software for a defined period ranging from one month to five years.

Under perpetual license arrangements, the customer is provided the right to use the software for an indefinite period.

Subscription revenue related contracts can be both short and long-term, with stated contract terms that range from one month to five years.

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 under ASC 606 may be shorter than the stated term.

• SaaS and related support services :

Hosted software applications are primarily comprised of marketing, business management and customer retention solutions for which the Company develops functionality, provides when-and-if available updates and enhancements, hosts, manages and provides telephone and technical support by entering into subscription agreements with customers for a stated period of access.

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

EverCommerce Inc.

Notes to Consolidated Financial Statements

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 to customers.

The Company records deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection from the customer.

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:

License revenue is generated from the sale of on-premise perpetual or term licenses, which are primarily business management related software applications.

The majority of the Company’s license arrangements include license support contracts.

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, which primarily relate to providing telephone and technical support, unspecified software product upgrades and maintenance releases and patches during the term of the support period, are generally recognized ratably over the contractual period that the services are delivered.

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.

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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.

The Company records a contract asset on the consolidated balance sheets when revenue is recognized prior to invoicing and the right to payment is not solely subject to the passage of time.

The Company records an unbilled receivable on the consolidated balance sheets when revenue is recognized prior to invoicing and the right to payment is solely subject to the passage of time.

The Company recognizes deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection from the customer.

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.

The Company has determined that the nature of the payment processing and administration services is a stand-ready obligation whereby the Company stands ready to either arrange for the processing of transactions or stands ready to provide members with access to the group purchasing program on a continuous basis throughout the contract term.

• Payment processing 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.

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.

Payment processing revenue is recurring and volume based, resulting in the total consideration within these arrangements being variable.

The Company applies the variable consideration allocation exception and therefore is not required to estimate variable consideration or a related constraint, as it ascribes the transaction consideration earned to the distinct increment of time for which the service was provided.

As a result, the Company measures revenue from transaction services on a daily basis based on an accumulation of the services that have been provided during each respective day.

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.

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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 members under the contract the Company has negotiated with its suppliers.

The amount of revenue recognized from these administration services is greater than the consideration received from customers given payment for these services are received in arrears, typically

EverCommerce Inc.

Notes to Consolidated Financial Statements

within a quarter from when the underlying services were provided.

The Company recognizes a contract asset on the consolidated balance sheets until payment has been received.

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.

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Marketing technology solutions consist of digital advertising management and consumer connection services.

These advertising management services include content creation, search engine optimization and paid media management 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.

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Certain arrangements may be invoiced on a quarterly or annual basis.

Within such arrangements, the Company either recognizes deferred revenue or a customer deposit on the consolidated balance sheets depending on whether the amounts invoiced in advance of revenue being recognized are classified as non-refundable or refundable.

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.

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Fees associated with each consumer match generated may be either fixed price or variable.

The variable consideration is allocated to the connection from which it was derived;

however, given the inherent variable nature of this consideration, revenue is constrained to the Company’s estimation of transaction consideration.

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.

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Marketing technology solutions service related contracts are typically short-term with stated contract terms that are less than one year.

Other revenues generally consist of fees associated with the sale of distinct professional services and hardware.

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.

Marketing revenue related professional service fees are derived from website design, creation or enhancement services.

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.

Hardware revenue consists of equipment that supports or enables the Company’s products or services within subscription and transaction fees offerings.

Revenue associated with performance obligations for hardware is recognized at a point-in-time, as dictated by the point at which the customer has the ability to direct the use of and obtain substantially all the benefit from the asset.

The Company records a contract asset on the consolidated balance sheets when services have been provided and the right to payment is not solely subject to the passage of time, and an unbilled receivable when services have been provided and the right to payment is solely subject to the passage of time.

These arrangements may also result in deferred revenue on the consolidated balance sheets when revenues are recognized subsequent to cash collection.

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.

EverCommerce Inc.

Notes to Consolidated Financial Statements

Performance Obligations and Standalone Selling Price:

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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.

Judgment can be involved when determining the stand-alone selling price of products and services.

For the majority of the Company’s SaaS, on-premise license and professional services, the Company establishes stand-alone selling price based on observable selling prices to similar classes of customers.

If the stand-alone selling price is not observable through past transactions, the Company estimates the stand-alone selling price taking into consideration available information such as market conditions and internally approved pricing guidelines related to the performance obligation.

As permitted under ASC 606, at times the Company has established the stand-alone selling price of performance obligations as a range and uses this range to determine whether there is a discount that needs to be allocated based on the relative stand-alone selling price of the various performance obligations.

At contract inception, the Company performs a review of each performance obligation’s selling price against the established stand-alone selling price range.

If any performance obligations are priced outside of the established stand-alone selling price range, the Company reallocates the total transaction price to each performance obligation based on the relative stand-alone selling price for each performance obligation.

The established range is reassessed on a periodic basis when facts and circumstances surrounding these established ranges change.

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, therefore, are outside the scope of ASC 606.

These warranties will continue to be accounted for under the provisions of ASC Topic 460-10, Guarantees.

To date, the Company has not incurred any material costs as a result of such commitments.

Variable Consideration:

Revenue is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration.

The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty is resolved.

The transaction consideration within the Company’s contracts may be entirely variable or contain a variable component.

When permitted, the Company applies the variable consideration allocation exception.

This exception is generally met for transaction fees, marketing technology solutions and professional services charged on a time-and-materials basis.

When the variable consideration allocation exception is not permitted, the Company continues to assess the underlying judgments and estimates used to determine the variable consideration as uncertainties are resolved or new information arises.

Reassessment of variable consideration occurs until the underlying uncertainty is resolved.

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:

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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).

Certain term license and marketing service arrangements contain a material right related to the customer’s ability to renew at an incremental discount.

Transaction consideration allocated to the material right is recognized over the expected renewal period, which begins at the end of the initial contractual term and is generally five years.

EverCommerce Inc.

Notes to Consolidated Financial Statements

Significant financing component:

The amount of consideration is not adjusted for a significant financing component if the time between payment and the transfer of the related good or service is expected to be one year or less under the practical expedient in ASC 606-10-32-18.

The Company’s revenue arrangements are typically accounted for under such expedient as payments are within one year of transfer of the performance obligations.

Other considerations:

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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.

The Company expenses the costs of advertising as incurred.

Advertising costs are incurred primarily for internet-based advertising.

Included in sales and marketing expenses on the consolidated statements of operations and comprehensive loss are charges for advertising of $ 21.4 million, $ 19.3 million and $ 8.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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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Notes to Consolidated Financial Statements

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

Stock-based Compensation

The Company follows ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), with respect to stock-based compensation.

Stock-based compensation, including grants of stock options and restricted stock units, are valued at fair value on the date of grant and are generally expensed on a straight-line basis over the applicable service period.

The Company uses the Black-Scholes option-pricing model and a binomial lattice model to estimate the fair value of options granted with time-based vesting and market-based vesting terms, respectively.

The following inputs to the Black-Scholes option-pricing model are considered in estimating the fair value:

the fair value of the common stock, expected volatility, expected term, risk-free interest rate and expected dividends.

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”) (refer to Note 12), it will calculate volatility based on its own trading history.

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.

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The dividend yield assumption is based on history and the expectation of paying no dividends.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense, when recognized in the financial statements, is based on awards that are ultimately expected to vest.

EverCommerce Inc.

Notes to Consolidated Financial Statements

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.

The Company is a C corporation for federal income tax purposes.

Deferred taxes are provided on a liability method 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.

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.

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The Company's total provision for taxes includes income taxes on the Company's corporate subsidiaries.

The Company records uncertain tax positions in accordance with ASC Topic 740, Income Taxes (“ASC 740”), on the basis of a two-step process in which (i) it is determined whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

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.

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Foreign Currency Translation

The financial results of certain of the Company’s foreign subsidiaries are translated into U.S.

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 that operate primarily in a functional currency other than the U.S.

dollar are translated using the current exchange rate in effect at the consolidated balance sheet date (the Spot Rate).

Revenues and expenses are translated using the average exchange rate in effect during the period in which they are recognized.

The gains and losses from foreign currency translation of these subsidiaries’ financial statements are recorded directly as a separate component of stockholders’ deficit and represent the majority of the balance within accumulated other comprehensive income on the consolidated balance sheets.

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

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 foreign subsidiaries that operate primarily in the U.S.

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 at the consolidated balance sheet date.

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

EverCommerce Inc.

Notes to Consolidated Financial Statements

elements are remeasured using average exchange rates in effect during the period in which the elements are recognized within the consolidated statements of operations and comprehensive loss.

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

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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 February 2016, the FASB issued ASU 2016-02, Leases (“ Topic 842”) to improve financial reporting about leasing transactions.

This ASU amends and supersedes existing lease accounting guidance and is intended to increase transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet representing the rights and obligations created by those leases, and requiring disclosure of key information about leasing arrangements.

The Company adopted the new lease standard as of January 1, 2022 using the optional transition method to the modified retrospective approach which eliminates the requirement to restate the prior period financial statements.

Under this transition provision, results for annual reporting periods beginning on January 1, 2022 are presented under Topic 842, while prior period amounts continue to be reported and disclosed in accordance with the Company’s legacy guidance under ASC Topic 840, Leases .

A number of practical expedients and policy elections are available under the new guidance.

The Company elected the "package of practical expedients" permitted under the transition guidance, which among other things, did not require reassessment of whether contracts entered into prior to January 1, 2022 are or contain leases, and has carried forward its initial determination of the historical lease classification for existing leases.

The Company has not elected to adopt the “hindsight” practical expedient, and therefore will measure the ROU asset and lease liability using the remaining portion of the lease term at adoption on January 1, 2022.

Adoption of Topic 842 resulted in the recording of ROU assets and lease liabilities related to the Company’s operating leases of approximately $ 28.3 million and $ 34.8 million, respectively, on January 1, 2022.

In addition, upon transition, we eliminated deferred rent liabilities of $ 7.5 million, prepaid rent of $ 0.4 million and other non-current assets of $ 0.6 million.

The adoption of the new lease standard did not materially impact our consolidated statement of operations and comprehensive loss or consolidated statement of cash flows and did not result in a cumulative-effect adjustment to the opening balance of retained earnings.

Accounting pronouncements not yet adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326);

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), 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 will be effective for annual reporting periods beginning after December 15, 2022.

The Company has completed evaluating the impact the adoption of this standard will have on its financial statements and has concluded the impact will not be material to the consolidated financial statements.

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 (Topic 606) (“ASU 2021-08”), which amends the guidance in ASC 805 to require that an

EverCommerce Inc.

Notes to Consolidated Financial Statements

acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The 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 payments terms’ effects on subsequent revenue recognized by the acquirer.

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 impact of adoption is unknown as it will be based on any potential acquisitions consummated in the year of adoption.

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).

During 2021, the Company completed five business acquisitions in conjunction with the execution of its long-term plans and objectives in building a service commerce platform supporting the success of SMBs.

All of the acquisitions qualified as business combinations under ASC Topic 805, Business Combinations (“ASC 805”).

Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition date 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.

Assets acquired and liabilities assumed in connection with each acquisition have been recorded at their fair values.

Fair values were determined by management using the assistance of third-party valuation specialists.

The valuation methods used to determine the fair value of intangible assets included the income approach—relief from royalty method for developed technology and trade name, the income approach—excess earnings method for customer relationships and the comparative business valuation method for non-compete agreements.

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, 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.

The Company’s consolidated statements of operations and comprehensive loss include $ 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 $ 21.6 million related to acquisitions consummated in 2021.

Each acquisition allows for an adjustment to the purchase price to be made subsequent to the transaction closing date based on the actual amount of working capital and cash delivered to the Company.

The consideration paid and purchase price allocations disclosed reflect the effects of these adjustments.

EverCommerce Inc.

Notes to Consolidated Financial Statements

The following table summarizes the estimated fair values of consideration transferred, assets acquired and liabilities assumed for each acquisition in 2021:

Briostack PulseM MDTech Timely DrChrono Total

(in thousands)

Cash $ 34,441 $ 34,430 $ 15,751 $ 99,820 $ 181,919 $ 366,361

Rollover equity 726 — — — — 726

Total consideration $ 35,167 $ 34,430 $ 15,751 $ 99,820 $ 181,919 $ 367,087

Net assets acquired:

Cash and cash equivalents $ 17 $ — $ 100 $ 1,170 $ 130 $ 1,417

Accounts receivable, trade 156 — 175 290 3,344 3,965

Other receivables 222 151 48 95 149 665

Contract assets — — — — 1,172 1,172

Prepaid expenses and other current assets 53 32 34 128 3,115 3,362

Property and equipment 22 4 16 219 226 487

Other non-current assets 144 3 — 52 23 222

Intangible—developed technology 1,360 2,380 1,640 7,014 8,480 20,874

Intangible—customer relationships 4,800 12,510 5,830 28,836 53,970 105,946

Intangible—trade name 390 260 200 1,414 3,250 5,514

Intangible—non-compete agreements 23 10 10 63 10 116

Goodwill 28,274 22,866 7,899 69,737 126,947 255,723

Deferred tax asset 1 — 2 3,397 — 3,400

Accounts payable ( 33 ) ( 113 ) ( 44 ) ( 230 ) ( 2,749 ) ( 3,169 )

Other current liabilities ( 28 ) — — ( 670 ) ( 2,086 ) ( 2,784 )

Accrued expenses and other ( 206 ) ( 99 ) ( 116 ) ( 940 ) ( 2,948 ) ( 4,309 )

Deferred tax liability — ( 3,538 ) — ( 10,463 ) ( 10,740 ) ( 24,741 )

Deferred revenue ( 28 ) ( 36 ) ( 43 ) ( 292 ) ( 374 ) ( 773 )

Total net assets acquired $ 35,167 $ 34,430 $ 15,751 $ 99,820 $ 181,919 $ 367,087

On January 19, 2021, the Company acquired 100 % of the interest of Briostack LLC dba Briostack (“Briostack”), a provider of operational management software to pest control businesses, for $ 35.2 million.

Under the terms of the purchase agreement, certain members of Briostack received 45,454 shares of common stock rollover equity.

The Company assessed the fair value of the shares at $ 0.7 million by applying a market approach.

The fair value of the rollover equity is reflected in the total consideration above.

On March 17, 2021, the Company acquired 100 % of the interest of Speetra, Inc.

dba PulseM (“PulseM”), a provider of enterprise-level reputation management software for small businesses, for $ 34.4 million.

On July 8, 2021, the Company acquired 100 % of the interest of PM Ventures, LLC dba MDTech (“MDTech”), a provider of electronic charge capture solutions to physicians via its SaaS-based MD Coder application and suite of

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.

EverCommerce Inc.

Notes to Consolidated Financial Statements

add-ons, for $ 15.8 million.

On July 8, 2021, the Company acquired 100 % of the interest of Timely Ltd.

(“Timely”), a booking and Business Management Software company, for $ 99.8 million.

Timely is based in New Zealand and has operations in the United Kingdom and Australia, as well.

On November 18, 2021, the Company acquired 100 % of the interest of DrChrono Inc.

(“DrChrono”), an electronic health record and practice management provider, for $ 181.9 million.

With respect to total goodwill recognized for the business acquisitions consummated during the year ended December 31, 2021, the Company expects that $ 36.1 million of goodwill will be deductible for income tax purposes.

2020 Acquisitions

During 2020, the Company completed nine business acquisitions in conjunction with the execution of its long-term plans and objectives in building a service commerce platform supporting the success of SMBs.

All of the acquisitions qualified as business combinations under ASC 805.

Accordingly, the Company recorded all assets acquired and liabilities assumed at their acquisition date fair values, with any excess consideration recognized as goodwill.

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.

2023 Acquisition

On August 10, 2023, the Company acquired 100 % of the interest of Norman’s Dojo Inc.

(“Kickserv”), a provider of field service management software for home service businesses for approximately $ 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.

Assets acquired and liabilities assumed in connection with each acquisition have been recorded at their fair values.

Fair values were determined by management using the assistance of third-party valuation specialists.

The valuation methods used to determine the fair value of intangible assets included the income approach—relief from royalty method for developed technology and trade name, the income approach— excess earnings method for customer relationships including government contracts and the comparative business valuation method for non-compete agreements.

A Monte Carlo simulation was used as the valuation method to determine the fair value of earnout liabilities.

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 five years , and the income approach—multi period excess earnings method for customer relationships with an estimated useful life of 13 years.

Cash flow forecasts were generally based on pre-acquisition forecasts coupled with estimated revenues and cost synergies available to a market participant.

The Company’s consolidated statements of operations and comprehensive loss include $ 15.5 million of acquisition related transaction costs within general and administrative for acquisitions consummated in 2020.

For the year ended December 31, 2020 the Company recognized revenue of $ 62.3 million related to acquisitions consummated in 2020.

Each acquisition allows for an adjustment to the purchase price to be made subsequent to the transaction closing date based on the actual amount of working capital and cash delivered to the Company.

The consideration paid and purchase price allocations disclosed reflect the effects of these adjustments.

EverCommerce Inc.

Notes to Consolidated Financial Statements

The following table summarizes the estimated fair values of consideration transferred, assets acquired and liabilities assumed for each acquisition in 2020:

Remodeling Qiigo AlertMD Invoice Simple

(in thousands)

Cash $ 25,909 $ 21,564 $ 21,853 $ 32,507

Rollover equity — 619 — —

Fair value of earnout 2,455 — — —

Total consideration $ 28,364 $ 22,183 $ 21,853 $ 32,507

Net assets acquired:

Cash and cash equivalents $ 520 $ 3 $ — $ 598

Accounts receivable, trade 3,401 321 510 688

Other receivables 6 — — 271

Contract assets 85 249 — —

Prepaid expenses and other current assets 95 74 11 57

Property and equipment 65 114 58 184

Other non-current assets — 757 — —

Intangible—developed technology 1,480 2,120 2,030 1,530

Intangible—customer relationships 11,380 11,110 13,490 17,970

Intangible—trade name 570 710 260 190

Intangible—non-compete agreements 110 40 40 60

Goodwill 12,843 7,405 5,531 18,474

Deferred tax asset, net — 177 — —

Accounts payable ( 1,564 ) ( 148 ) — ( 498 )

Accrued expenses and other ( 291 ) ( 565 ) ( 24 ) ( 412 )

Customer deposits ( 85 ) — — ( 1,229 )

Deferred tax liability, net ( 251 ) — — ( 5,360 )

Deferred revenue — ( 184 ) ( 53 ) ( 16 )

Total net assets acquired $ 28,364 $ 22,183 $ 21,853 $ 32,507

EverCommerce Inc.

Notes to Consolidated Financial Statements

Brighter Vision Socius Service Fusion My PT Hub

(in thousands)

Cash $ 17,350 $ 15,670 $ 122,333 $ 10,681

Rollover equity 127 — — —

Fair value of earnout — — — 1,016

Total consideration $ 17,477 $ 15,670 $ 122,333 $ 11,697

Net assets acquired:

Cash and cash equivalents $ 112 $ 46 $ 660 $ 315

Accounts receivable, trade 2 908 38 7

Other receivables 35 79 686 73

Prepaid expenses and other current assets 48 23 192 45

Property and equipment 26 36 139 209

Other non-current assets 9 — 180 19

Intangible—developed technology 760 1,350 2,820 586

Intangible—customer relationships 6,150 9,900 25,680 1,918

Intangible—trade name 330 520 1,330 140

Intangible—non-compete agreements 20 40 70 13

Goodwill 12,090 3,326 93,717 9,110

Accounts payable ( 61 ) ( 79 ) ( 215 ) ( 209 )

Other current liabilities — — ( 57 ) —

Accrued expenses and other ( 210 ) ( 450 ) ( 872 ) ( 162 )

Deferred tax liability, net ( 1,734 ) — ( 1,713 ) ( 286 )

Deferred revenue ( 100 ) ( 29 ) ( 322 ) ( 81 )

Total net assets acquired $ 17,477 $ 15,670 $ 122,333 $ 11,697

EverCommerce Inc.

Notes to Consolidated Financial Statements

Updox Other Total

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 $ 14,974

Rollover equity 573 — 1,319

Fair value of earnout — — 3,471

Total consideration $ 143,100 $ 85 $ 415,269

Net assets acquired:

Cash and cash equivalents $ 4,994 $ — $ 7,248

Accounts receivable, trade 981 — 6,856

Other receivables 628 — 1,778

Contract assets — — 334

Prepaid expenses and other current assets 640 — 1,185

Property and equipment 1,610 — 2,441

Other non-current assets 377 — 1,342

Intangible—developed technology 7,870 11 20,557

Intangible—customer relationships 48,150 72 145,820

Intangible—trade name 2,620 2 6,672

Intangible—non-compete agreements 110 — 503

Prepaid expenses and other assets $ 51

Intangibles—definite lived 3,155

Goodwill 12,497

Deferred tax asset, net 58 — 235

Accounts payable ( 1,152 ) — ( 3,926 )

Other current liabilities ( 41 ) — ( 98 )

Accrued expenses and other ( 1,482 ) — ( 4,468 )

Customer deposits — — ( 1,314 )

Accounts payable, accrued expenses and other ( 11 )

Deferred tax liability, net ( 397 )

Deferred revenue ( 274 )

Other non-current liabilities ( 47 )

Total net assets acquired $ 14,974

On January 6, 2020, the Company acquired 100 % of the interest of Azar, LLC and Alnashmi for Digital Marketing, LLC (“Remodeling”), an online platform that connects homeowners with home improvement companies, for $ 28.4 million.

Under the terms of the purchase agreement, the Company was required to pay the seller an earnout based on achieving $ 6.6 million and $ 5.0 million of total revenue during calendar years ended 2021 and 2020, respectively.

The earnout amount would have been $ 2.0 million per year, if the target was met;

no consideration would have been paid if the target was not met.

At the acquisition date, the Company determined the fair value of the earnout to be $ 2.5 million and included the amount in the total consideration above.

The 2020 earnout target was met and the earnout of $ 2.0 million was paid in 2021.

At December 31, 2021, the Company concluded that the 2021 earnout target was not met and released the remaining liability with a corresponding gain of $ 0.5 million recorded in general and administrative on the consolidated statements of operations and comprehensive loss.

On January 16, 2020, the Company acquired 100 % of the interest of Qiigo, LLC (“Qiigo”), a local marketing agent that builds brand unity and helps national brands and their franchises boost their qualified leads, for $ 22.2 million.

EverCommerce Inc.

Notes to Consolidated Financial Statements

Under the terms of the purchase agreement, certain members of Qiigo received 127,249 shares of common stock rollover equity.

The Company assessed the fair value of the shares at $ 0.6 million by applying a market approach.

The fair value of the rollover equity is reflected in the total consideration above.

On January 24, 2020, the Company acquired certain assets and liabilities of Rulester, LLC dba AlertMD, LLC and ChargeMD, LLC (“AlertMD”), a provider of SaaS-based back-office, patient care coordination and front-office solutions, for $ 21.9 million.

Invoice Simple

On April 17, 2020, the Company acquired 100 % of the interest of Zenvoice Inc.

dba Invoice Simple (“Invoice Simple”), a provider of invoicing and estimation software platform for independent contracts, freelancers and business owners, for $ 32.5 million.

Brighter Vision

On August 21, 2020, the Company acquired 100 % of the interest of Brighter Vision Web Solutions, Inc.

(“Brighter Vision”), a provider of offerings of custom-built websites and marketing solutions to therapists in the behavioral health sector, for $ 17.5 million.

Under the terms of the purchase agreement, certain members of Brighter Vision received 21,892 shares of common stock rollover equity.

The Company assessed the fair value of the shares at $ 0.1 million by applying a market approach.

The fair value of the rollover equity is reflected in the total consideration above.

On October 16, 2020, the Company acquired 100 % of the interest of Socius Marketing, Inc.

(“Socius”), a provider of full service internet marketing that specializes in content design, website development and search engine optimization, for $ 15.7 million.

Service Fusion

On October 17, 2020, the Company acquired 100 % of the interest of FSM Technologies, LLC (“Service Fusion”), a provider of an end-to-end field service management SaaS platform, for $ 122.3 million.

On November 18, 2020, the Company acquired 100 % of the interest of Fitii, Limited and Fitii LLC (collectively “My PT Hub”), a provider of software that enables gym and health club customers to improve monthly collections, generate new business, enhance member engagement, increase retention and automate business processes, for $ 11.7 million.

Under the terms of the purchase agreement, the Company was required to pay the seller an earnout based on achieving $ 4.6 million of total revenue during calendar year end 2021.

The earnout amount would have been $ 1.0 million, if the target was met;

no consideration would have been paid if the target was not met.

At the acquisition date, the Company determined the fair value of the earnout to be $ 1.0 million and included the amount in the total consideration above.

At December 31, 2021, the Company concluded that the earnout target was not met and released the remaining liability with a corresponding gain of $ 1.0 million recorded in general and administrative on the consolidated statements of operations and comprehensive loss.

On December 16, 2020, the Company acquired 100 % of the interest of Updox, LLC (“Updox”), a provider of a healthcare customer relationship management solution, for $ 143.1 million.

Under the terms of the purchase

EverCommerce Inc.

Notes to Consolidated Financial Statements

agreement, certain members of Updox received 72,896 shares of common stock rollover equity.

The Company assessed the fair value of the shares at $ 0.6 million by applying a market approach.

The fair value of the rollover equity is reflected in the total consideration above.

With respect to total goodwill recognized for the business acquisitions consummated during the year ended December 31, 2020, the Company expects that $ 167.1 million of goodwill with be deductible for income tax purposes.

Pro Forma Results of Acquisitions (unaudited)

The following table presents unaudited pro forma consolidated results of operations for the years ended December 31, 2021 and 2020 as if the aforementioned 2021 and 2020 acquisitions had occurred as of January 1, 2020.

The pro forma information includes the business combination accounting effects resulting from these acquisitions, including interest expense of $ 17.1 million and $ 48.3 million for the years ended December 31, 2021 and 2020, respectively, to account for funds borrowed earlier, issuance of our common shares at earlier dates which impacts the calculation of basic and diluted net loss per share, removal of transaction costs of $ 8.4 million and $ 15.6 million for the years ended December 31, 2021 and 2020, respectively, and additional amortization of $ 9.6 million and $ 24.1 million for the years ended December 31, 2021 and 2020, respectively, resulting from the amortization of intangible assets beginning as of January 1, 2020.

We prepared the pro forma financial information for the combined entities for comparative purposes only, and the information is not indicative of what actual results would have been if the acquisitions had occurred at the beginning of the periods presented, nor is the information intended to represent or be indicative of future results of operations.

Year ended December 31,

(in thousands, except per

share amounts)

Total revenue $ 536,936 $ 442,095

Net loss $ ( 104,218 ) $ ( 138,275 )

Adjustments to net loss (see Note 13)

( 15,105 ) ( 67,811 )

Net loss attributable to common stockholders $ ( 119,323 ) $ ( 206,086 )

Basic and diluted net loss per share attributable to common stockholders $ ( 1.01 ) $ ( 4.94 )

EverCommerce Inc.

Notes to Consolidated Financial Statements

2021 Acquisitions

During 2021, the Company completed the acquisition of 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 $ 367.1 million, including $ 366.4 million in cash consideration, and $ 0.7 million of rollover equity.

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

The Company’s consolidated statements of operations and comprehensive loss includes $ 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 $ 21.6 million related to acquisitions consummated in 2021.

Disaggregation of Revenue

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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 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 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.

Short-term contract liabilities are included within deferred revenue on the consolidated balance sheets.

Long-term contract liabilities are included within other non-current liabilities on the consolidated balance sheets.

Revenue recognized from the

These amounts typically relate to contracts that include on-premise licenses and professional services where

EverCommerce Inc.

Notes to Consolidated Financial Statements

contract liability balance at December 31, 2021 was $ 23.0 million for the year ended December 31, 2022.

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 $ 22.9 million for the year ended December 31, 2023.

Revenue recognized from the contract liability balance at December 31, 2021 was $ 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.

In these arrangements, we have concluded there are no enforceable rights and obligations during the period in which the option to cancel is exercisable by the customer and therefore the consideration received is recorded as a customer deposit liability.

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

Bad debt expense 5,578

Write-offs, net of recoveries ( 2,837 )

Balance, December 31, 2022

Beginning balance adjustment due to implementation of the new credit loss standard 1,309

Bad debt expense 6,016

Write-offs, net of recoveries ( 5,812 )

Balance, December 31, 2023

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.

Variable consideration accounted for under the variable consideration allocation exception associated with unsatisfied performance obligations or an unsatisfied promise that forms part of a single performance obligation under application of the series guidance have been excluded.

Remaining performance obligations generally relate to those which are stand-ready in nature, as found within the subscription and marketing technology solutions revenue streams.

2 unchanged sentences

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 five years , which corresponds with the useful life of the related capitalized software.

The costs to obtain contracts are amortized over five years , which corresponds with the useful life of the related technology.

Short-term assets were $ 8.6 million and $ 6.6 million at December 31, 2023 and 2022, respectively, and long-term assets were $ 17.9 million and $ 15.1 million at December 31, 2023 and 2022, respectively.

The Company recorded $ 5.7 million, $ 4.3 million and $ 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 $ 2.3 million, $ 1.7 million and $ 1.0 million, respectively, which is included in cost of revenues expense on the consolidated statements of operations and comprehensive loss.

The Company has concluded that there are no other material costs incurred in fulfillment of customer contracts, that are not accounted for under other GAAP, which meet the capitalization criteria under ASC 606 and ASC Topic 340-40, Accounting for Other Assets and Deferred Costs (“ASC 350-40”).

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

Balance, January 1, 2022

Additions 255,723

Measurement period adjustments (1)

1 unchanged sentence

Balance, December 31, 2022

Measurement period adjustments (1)

Acquired goodwill

Effect of foreign currency exchange rate changes 852

Balance, December 31, 2023

(1) The $ 0.6 million and $ 0.3 million of measurement period adjustments relate to acquisitions consummated during the years ended December 31, 2021 and 2020, respectively.

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

EverCommerce Inc.

Notes to Consolidated Financial Statements

Intangible Assets

5 unchanged sentences

(in thousands)

Customer relationships 3 - 20 years

Customer relationships (1)

$ 605,908 $ 336,558 $ 269,350

Developed content and technology 2 - 12 years

Developed technology (1)

106,482 74,717 31,765

Trademarks and trade names 3 - 10 years

Trade names (1)

38,627 24,293 14,334

2 unchanged sentences

$ 753,425 $ 437,906 $ 315,519

(1) During the quarter ended December 31, 2023, we recognized an impairment charge including $ 2.7 million of customer relationships, $ 0.3 million of developed technology and $ 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

5 unchanged sentences

$ 605,753 $ 265,342 $ 340,411

Developed content and technology 2 - 12 years

Developed technology

105,766 59,208 46,558

Trademarks and trade names 3 - 10 years

38,131 19,725 18,406

4 unchanged sentences

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

EverCommerce Inc.

Notes to Consolidated Financial Statements

In determining the useful life for each category of intangible asset, the Company considered the following:

5 unchanged sentences

Total amortization expense for the Company’s intangible assets $ 315,519

EverCommerce Inc.

Notes to Consolidated Financial Statements

Property and Equipment

7 unchanged sentences

Property and equipment, net $ 9,734 $ 11,930

Depreciation expense was $ 4.1 million for each of the years ended December 31, 2022 and 2021 and $ 4.0 million for the year ended December 31, 2020 .

Depreciation expense was $ 4.6 million for the year ended December 31, 2023 and $ 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 $ 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).

Capitalized Software

6 unchanged sentences

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, 2022, 2021 and 2020 the Company recorded a charge to general and administrative expense on

EverCommerce Inc.

Notes to Consolidated Financial Statements

the accompanying consolidated statements of operations and comprehensive loss for $ 1.2 million, $ 0.7 million and nil , respectively, related to capitalized features no longer expected to be used.

The Company leases real estate from unrelated parties under operating lease agreements that have initial terms ranging from one to 11 years.

During the years ended December 31, 2023, 2022 and 2021, we recorded a charge of $ 0.6 million, $ 1.2 million and $ 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 $ 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).

The Company leases real estate from unrelated parties under operating lease agreements that have initial terms ranging from one year to 11 years.

Some leases include one or more options to renew, generally at our sole discretion, of five additional years each.

6 unchanged sentences

Total lease cost $ 8,821 $ 9,694

Included in the consolidated statements of operations and comprehensive loss is total rent expense of $ 9.7 million and $ 8.9 million for the years ended December 31, 2021 and 2020, respectively.

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

EverCommerce Inc.

Notes to Consolidated Financial Statements

During the three months ended December 31, 2023, we recorded a $ 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).

Supplemental cash flow information related to leases is as follows:

1 unchanged sentence

(in thousands)

Cash paid for amounts included in measurement of lease liabilities:

Operating cash outflows - payments on operating leases $ 8,010

Right-of-use assets obtained in exchange for new lease obligations:

Operating leases $ 772

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

Operating lease assets obtained in exchange for operating lease liabilities $ 1,602 $ 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:

5 unchanged sentences

Total operating lease liabilities $ 23,189 $ 27,739

At December 31, 2022, the weighted average remaining lease term for operating leases was 6.34 years and the weighted average discount rate w as 4.8 %.

EverCommerce Inc.

Notes to Consolidated Financial Statements

At December 31, 2023 and 2022, the weighted average remaining lease term for operating leases was 5.75 years and 6.34 years, and the weighted average discount rate w as 5.1 % and 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):

4 unchanged sentences

Total present value of lease liabilities $ 23,189

A summary of the future minimum lease commitments for all non-cancelable operating lease agreements were as follows as of December 31, 2021 (in thousands):

Year ended December 31,

Thereafter 12,692

Total future minimum payments due $ 41,476

EverCommerce Inc.

3 unchanged sentences

(in thousands)

Term notes with interest payable monthly, interest rate at Adjusted LIBOR or Alternative Base Rate, plus an applicable margin of 3.25 % ( 7.32 % at December 31, 2022) plus quarterly principal payments of 0.25 % of original principal balance with balloon payment due July 2028

Term notes with interest payable monthly, interest rate at Adjusted SOFR or Alternative Base Rate (“ABR”), plus an applicable margin of 3.25 % ( 8.46283 % at December 31, 2023) quarterly principal payments of 0.25 % of original principal balance with balloon payment due July 2028

$ 537,625 $ 543,125

Revolver with interest payable monthly, interest rate at Adjusted LIBOR or Alternative Base Rate, plus an applicable margin of 3.25 % ( 7.63 % at December 31, 2022), and outstanding balance due July 2026

Subordinated unsecured promissory note related to acquisition of Service Nation, Inc., interest paid-in-kind, interest rate at 8.5 % with balloon payment due September 2022

Subordinated unsecured promissory note related to acquisition of Technique Fitness, Inc.

D/B/A Club OS, interest paid-in-kind, interest rate at 7 % with balloon payment due December 2022

Revolver with interest payable monthly, interest rate at Adjusted SOFR or ABR, plus an applicable margin of 3.25 % ( 8.47044 % at December 31, 2023), and outstanding balance due July 2026

Principal debt 537,625 543,125

4 unchanged sentences

Long-term portion $ 526,696 $ 530,946

In connection with the IPO on July 6, 2021, the Company entered into a credit facility (“Credit Agreement”) that includes term loans in an aggregate principal amount of $ 350.0 million (“Initial Term Loans”), a revolver with a capacity of $ 190.0 million (“Revolver”) and a sub-limit of the Revolver available for letters of credit up to an aggregate face amount of $ 20.0 million.

The Initial Term Loans were used to retire the Company’s debt arrangements that were outstanding prior to the IPO.

A loss on debt extinguishment related to the refinancing of the Company’s debt arrangements was recorded during the year ended December 31, 2021 totaling $ 28.7 million.

As of December 31, 2021, the Company also had outstanding subordinated promissory notes (“Legacy Subordinated Notes”) that included paid-in-kind interest.

The remaining Legacy Subordinated Notes outstanding principal and paid-in-kind interest were fully repaid during the year ended December 31, 2022.

As of November 2021, the Company had $ 35.0 million outstanding under the Revolver, and borrowed the remaining capacity of the Revolver to fund the acquisition of DrChrono.

Subsequently in the same month, the Company received additional term loans in an aggregate principal amount of $ 200.0 million (“Additional Term Loans” and together with the Initial Term Loans, the “Term Loans”), the proceeds of which were used to repay the outstanding principal balance of the Revolver of $ 190.0 million and for general corporate purposes.

The Initial Term Loans, Revolver and Additional Term Loans are collectively referred to herein as the (“Credit Facilities”).

The Term Loans have a term of seven years , and quarterly payments of principal of $ 1.4 million and interest in arrears.

The Revolver has a term of five years .

Borrowings under the Credit Facilities will be available as alternate base rate (“ABR”) or Eurocurrency borrowings.

ABR borrowings under the Credit Facilities accrue interest at an alternate base rate plus an applicable rate, and Eurocurrency borrowings accrue interest at an adjusted LIBOR rate plus an applicable rate.

The ABR rate represents the greater of the prime rate, Federal Reserve Bank of New York rate plus one half of 1%, and an adjusted LIBOR rate for a one month interest period plus 1 %.

At the time of

EverCommerce Inc.

Notes to Consolidated Financial Statements

origination, the applicable rate for the Term Loans and the Revolver was 3 % for Eurocurrency borrowings and 2 % for ABR borrowings, in each case subject to change based on the Company’s first lien net leverage ratio, as defined in the Credit Facilities.

The Company is party to a credit agreement, as amended, that provides for two term loans for an aggregate principal amount of $ 550.0 million (“Term Loans”), a revolver with a capacity of $ 190.0 million (“Revolver”) and a sub-limit of the Revolver available for letters of credit up to an aggregate face amount of $ 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 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 0.11448 %, 0.26161 %, 0.42826 % and 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 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 1 %.

The applicable rate for the Term Loans and the Revolver is 3.0 % for Adjusted SOFR borrowings and 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.

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However, as such trading prices require significant unobservable inputs to the pricing model, such instruments are classified as Level 2.

If no such trading prices are available, the Company determines the fair value of long-term debt using discounted cash flows, applying current interest rates and current credit spreads, based on its own credit risk.

The fair value amounts were approximately $ 531.6 million and $ 552.8 million as of December 31, 2022 and December 31, 2021, respectively.

Effective October 31, 2022, the Company entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $ 200.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate (the “Swap Agreement”).

The Swap Agreement has a term of 5 years with a fixed rate in the agreement of 4.2295 %.

As of December 31, 2022 the floating rate of the Term Loans was 4.07 % and the effective interest rate was 7.32 % including an applicable fixed margin of 3.25 %.

The Swap Agreement is accounted for as a derivative whereby the fair value of the contract is reported in other non-current assets or other non-current liabilities on the consolidated balance sheet, and gains and losses resulting from changes in the fair value are reported in interest and other expense, net, in the statement of operations and comprehensive loss.

As of December 31, 2022 the fair value of the Swap Agreement was a liability of $ 2.9 million and reported in other non-current liabilities on the consolidated balance sheet.

The fair value amounts were approximately $ 540.3 million and $ 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 $ 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 five years with a fixed rate in the agreement of 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 $ 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 4.5 years with a fixed rate in the agreement of 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

EverCommerce Inc.

Notes to Consolidated Financial Statements

of $ 4.9 million which are reported in other non-current liabilities on the consolidated balance sheets, and the associated net losses of $ 2.0 million and $ 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.

2 unchanged sentences

Year Ended December 31,

Thereafter 515,625

Total aggregate maturities of the Company’s debt $ 537,625

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

Year Ended December 31, 2021

(in thousands)

Convertible Preferred Stock:

Shares outstanding, beginning of period

72,226 — 44,958

Issuance of convertible preferred stock, net

Conversion to common stock upon closing of IPO

( 72,226 ) ( 7,857 ) ( 44,958 )

Shares outstanding, end of period

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 125,000,000 shares to 140,000,000 shares of Preferred Stock, $ 0.00001 par value per share, of which 50,000,000 were designated as Series A, 75,000,000 were designated as Series B and 15,000,000 were designated as Series C as of such date.

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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

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 $ 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 19.1 million shares of its common stock at a public offering price of $ 17.00 per share.

After underwriter discounts and commissions, net proceeds from the IPO were $ 303.9 million.

Additionally, the Company incurred other IPO related fees of $ 6.9 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

EverCommerce Inc.

Notes to Consolidated Financial Statements

successful IPO prior to February 23, 2025.

The Company’s Series B accruing dividends comprised a component of the redemption value of such stock.

Immediately prior to the closing of the IPO on July 6, 2021, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to authorize the issuance of up to 2,050,000,000 shares, par value $ 0.00001 per share, consisting of 2,000,000,000 shares of common stock and 50,000,000 shares of preferred stock.

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.

On June 14, 2022, our Board of Directors approved a stock repurchase program (the “Repurchase Program”) with authorization to purchase up to $ 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 of Directors approved an expansion of the Repurchase Program with authorization to purchase up to an additional $ 50.0 million in shares of the Company’s common stock ($ 100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.

preferred stock to common stock and additional paid-in capital.

On June 14, 2022, our Board approved a stock repurchase program (as subsequently amended, the “Repurchase Program”) with authorization to purchase up to $ 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 $ 50.0 million in shares of the Company’s common stock ($ 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 $ 50.0 million in shares of the Company’s common stock (from $ 100.0 million to $ 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 1,401,472 shares of common stock from the Selling Stockholders at a price of $ 9.82 per share, for an aggregate price of $ 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.

This 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 of Directors.

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 4,951,966 shares of common stock for $ 43.0 million, including transaction fees, during the year ended December 31, 2022.

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

As of December 31, 2023, $ 40.0 million remained available under the Repurchase Program.

Stock-Based Compensation

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The 2016 Plan allowed for the granting of stock-based awards through January 17, 2027.

In connection with the IPO, the Company’s board of directors 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, following the effectiveness of which, the Company can no longer make awards under the 2016 Plan.

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 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) 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 of directors, provided that no more than 22,000,000 shares may be issued upon the exercise of incentive stock options.

Based on the Company’s outstanding shares of common stock as of December 31, 2021, on January 1, 2022 the number of shares reserved for issuance under the 2021 Plan increased by 5.9 million.

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) 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 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 5.7 million.

Stock options

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Time-based options granted under the 2016 Plan vest 25 % after one year , and then monthly over the next three years whereas time-based options granted under the 2021 Plan vest 25 % after one year and then quarterly over the next three years .

Time-based options granted under both the 2016 Plan and the 2021 Plan expire 10 years from date of grant and carry an exercise price equal to the fair market value at the date

EverCommerce Inc.

Notes to Consolidated Financial Statements

of grant as determined by the Company’s board of directors 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.

Time-based options granted under both the 2016 Plan and the 2021 Plan expire 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:

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 $ 27.41 , and the other 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 $ 36.54 .

The performance-based options generally carried an exercise price equal to the fair market value at the date of grant as determined by the board of directors and expired 10 years from date of grant.

In connection with the IPO, the Company modified the performance-based stock options to be market condition-based options such that 50 % of a holder’s award will vest if the market price for the Company’s stock reaches and maintains a volume weighted average stock price of $ 27.41 , and the other 50 % of the holder’s award will vest if the market price for the Company’s stock reaches and maintains a volume weighted average stock price of $ 36.54 .

Each tranche of options is eligible to vest if the applicable volume weighted average stock price goal is achieved during the first measurement period of January through March of 2023, and if such goal(s) are not achieved during such period, then the tranche(s) of options are again eligible to vest during a second measurement period of April through June 2023.

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 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 $ 27.41 to $ 36.54 through June 2023, none of which vested.

To date, $ 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:

2022 2021 2020

Weighted-average risk-free interest rate 1.82 % 0.97 %

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16,937 $ 9.86 7.25 $ 3,870

Granted 1,713 11.67

Exercised ( 482 ) 5.38

Forfeited ( 869 ) 13.80

( 3,118 ) 10.00

Outstanding balance at December 31, 2023

2 unchanged sentences

11,612 $ 9.59 6.06 $ 21,910

The weighted-average grant date fair value of time-based stock options granted was $ 5.76 , $ 8.30 and $ 1.27 for the years ended December 31, 2022, 2021 and 2020, respectively.

The weighted-average grant date fair value of time-based stock options granted was nil , $ 5.76 and $ 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 $ 6.85 .

The weighted-average grant date fair value of the performance-based options granted in 2020 was $ 1.29 .

The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 2.2 million, $ 2.3 million and $ 2.1 million, respectively.

Compensation expense of $ 19.3 million, $ 11.1 million and $ 3.1 million was recognized in stock-based

EverCommerce Inc.

Notes to Consolidated Financial Statements

compensation for the years ended December 31, 2022, 2021 and 2020, respectively.

Compensation expense of $ 11.5 million , $ 19.3 million and $ 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 $ 9.7 million, which is expected to be recognized over a weighted average period of 1.71 years.

The unrecognized compensation expense associated with outstanding market condition-based stock options at December 31, 2022 was $ 2.5 million, which is expected to be recognized on a straight-line basis over the next 3 months.

There was no remaining unrecognized compensation expense associated with outstanding market condition-based stock options at December 31, 2023.

Restricted Stock Awards

During 2017, the Company granted 3.9 million time vesting restricted stock awards (“RSAs”).

The awards vested over a four-year period starting on October 17, 2016.

On the grant date, the awards were valued at $ 0.75 per award, totaling $ 2.9 million.

The Company recorded compensation expense for these awards on a straight-line basis over the vesting period, which approximated the service period.

The Company also granted 1.6 million shares of funding RSAs during the year ended December 31, 2018.

The funding awards only vested in the instances in which the majority owners or the Company purchased preferred stock.

The shares vested in an amount equal to a percentage of the number of preferred shares purchased by majority owners of the Company.

On August 23, 2019 and September 4, 2020, all unvested funding RSAs were modified such that the awards vested upon an investment by either of the equity sponsors and the percentage of awards that vested upon such investment was also modified.

These modifications did not result in additional compensation expense at the date of each modification;

however, future compensation expense for these awards was recognized based on the fair value of the award at the modification date.

The compensation expense associated with the unvested funding awards was recorded on the vesting date.

Unvested funding RSAs terminated upon the earlier of an IPO or a sale of the Company, as defined in the respective recipients’ Amended and Restated Restricted Stock Award Agreements dated May 7, 2021.

On May 7, 2021 and May 20, 2021, the Company issued 7.6 million shares of Series C for $ 105.8 million and 0.3 million shares of Series C for $ 4.2 million, respectively, to fund an acquisition.

In connection with these contributions, the funding RSAs were modified, and 0.6 million and 18 thousand, respectively, of funding RSAs vested at $ 17.00 per share.

Compensation expense of nil , $ 9.7 million and $ 7.0 million related to funding RSAs was recognized in general and administrative in the statement of operations and comprehensive loss for the years ended December 31, 2022, 2021 and 2020, respectively.

Prior to 2021, the Company granted 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.

In connection with these contributions, the RSAs were modified, and approximately 0.6 million of funding RSAs vested at $ 17.00 per share.

Compensation expense of $ 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 year ended December 31, 2022 and 2021, the Company issued time vesting restricted stock units (“RSUs”).

The awards vest over a four-year period starting on the date of grant, with 25 % of the awards vesting on the one-year anniversary, and then in equal quarterly installments for the subsequent three years .

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 four-year period starting on the grant date, with 25 % of the awards vesting on the one-year anniversary, and then in equal quarterly installments for the subsequent three years .

The vesting schedule for awards granted to existing employees provides that the awards vest ratably in quarterly installments over a period of four years .

The Company records compensation expense for these awards on a straight-line basis, which approximates the service period.

Compensation expense of $ 6.0 million and $ 1.2 million related to these awards was recognized in the statement of operations and comprehensive loss for the years ended December 31, 2022 and 2021, respectively.

The unrecognized compensation expense associated with the RSUs at December 31, 2022 was $ 20.2 million, which is expected to be recognized over a weighted average perio d of 3.01 years.

Compensation expense of $ 12.8 million, $ 6.0 million and $ 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,

EverCommerce Inc.

Notes to Consolidated Financial Statements

respectively.

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

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

Units Weighted-Average

Number of Units

Weighted-Average

Grant Date Fair Value

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Unvested, restricted stock units at January 1, 2023

2,022 $ 12.27

Granted 3,129 9.72

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2021 Employee Stock Purchase Plan

In connection with the IPO, the Company’s board of directors adopted the 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 ESPP consists of two components:

a Section 423 component, which is intended to qualify under Section 423 of the Internal Revenue Code (the “Code”) and a non-Section 423 component, which need not qualify under Section 423 of the Code.

The aggregate number of shares of common stock that were initially reserved for issuance under the ESPP is equal to the sum of (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 ( 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 our board of directors;

provided that in no event will more than 60,000,000 shares of our common stock be available for issuance under the Section 423 component of the ESPP.

Compensation expense of $ 1.5 million and $ 0.1 million related to the ESPP was recognized in the statement of operations and comprehensive loss for the years ended December 31, 2022 and 2021, respectively.

provided that in no event will more than 60,000,000 shares of our common stock be available for issuance under the ESPP.

Compensation expense of $ 1.3 million, $ 1.5 million and $ 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

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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:

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,

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2023 2022 2021

Outstanding options to purchase common stock and unvested RSUs 18,959,163 16,984,483 16,268,357

Outstanding convertible preferred stock (Series A and B) — — 117,183,540

Outstanding stock options and unvested RSUs

16,673,982 18,959,163 16,984,483

Shares of common stock pursuant to ESPP

277,656 341,389 14,755

Total anti-dilutive outstanding potential common stock 16,951,638 19,300,552 16,999,238

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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.

The Company has no assets or liabilities valued with Level 2 inputs.

EverCommerce Inc.

Notes to Consolidated Financial Statements

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.

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:

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Money market $ 764 $ — $ — $ 764 Cash equivalents

Interest swap rate $ — $ 2,893 $ — $ 2,893 Other non-current liabilities

Interest rate swaps

$ — $ 4,889 $ — $ 4,889 Other non-current liabilities

December 31, 2022 Balance Sheet Classification

2 unchanged sentences

Money market $ 6,568 $ — $ — $ 6,568 Cash equivalents

Contingent consideration $ — $ — $ 675 $ 675 Other current liabilities

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

Interest rate swap

$ — $ 2,893 $ — $ 2,893 Other non-current liabilities

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 $ 675

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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 defer a portion of their annual compensation on a pretax basis.

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).

The Company began making discretionary employer contributions effective January 1, 2020 equal to 25 % of employee contributions up to 8 % and increased this contribution to 100 % of employee contributions up to 4 % effective January 1, 2022 and contributed $ 4.8 million, $ 1.5 million and $ 1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

We began making discretionary employer contributions effective January 1, 2020 equal to 25 % of employee contributions up to 8 % and increased this contribution to 100 % of employee contributions up to 4 % effective January 1, 2022.

Employer matching contributions were $ 5.3 million, $ 4.8 million and $ 1.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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

Year Ended December 31,

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( 804 ) ( 5,362 ) ( 10,216 )

Net loss before income tax benefit

Net loss before income tax (expense) benefit

$ ( 43,981 ) $ ( 64,496 ) $ ( 92,017 )

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subsidiaries are not permanently reinvested, however, due to a combination of anticipated tax treatment and losses, no material deferred tax liability exists.

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

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Total deferred ( 1,657 ) ( 7,477 ) ( 12,026 )

Income tax benefit $ ( 4,680 ) $ ( 10,051 ) $ ( 3,630 )

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

Income tax expense (benefit)

$ 1,639 $ ( 4,680 ) $ ( 10,051 )

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:

(in thousands)

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Stock-based compensation 3,193 3,753

Deferred rent — 1,839

Lease liability 5,837 7,053

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Net deferred tax liabilities $ ( 7,577 ) $ ( 9,691 )

EverCommerce Inc.

Notes to Consolidated Financial Statements

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

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(in thousands)

Net operating losses, federal (Post December 31, 2018) $ 22,816 Indefinite

Net operating losses, federal (Post December 31, 2017)

$ 23,028 Indefinite

Net operating losses, federal (Pre January 1, 2018)

$ 2,030 2033 - 2037

Net operating losses, state $ 7,481 Various

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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 $ 51.9 million and $ 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

EverCommerce Inc.

Notes to Consolidated Financial Statements

deferred tax assets as of December 31, 2022, will be accounted for as follows:

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:

$ 51.5 million will be recognized as a reduction of income tax expense and $ 0.8 million will be recorded as an increase in equity.

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Balance at end of period $ 531 $ 364

As of December 31, 2022 and 2021, unrecognized tax benefits of $ 0.4 million and $ 0.1 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 any, related to unrecognized tax positions in the provision for income taxes in the accompanying consolidated statement 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

As of December 31, 2023 and 2022, unrecognized tax benefits o f $ 0.5 million and $ 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

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.

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 $ 0.2 million and $ 0.3 million as of December 31, 2023 and 2022, respectively.

On August 16, 2022, the U.S.

enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.

Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our financial statements.

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

14 unchanged sentences

Intellectual property migration — — ( 8,805 ) 13.65 — —

US taxation of foreign income

1,512 ( 3.44 ) — — — —

Other 1,296 ( 2.95 ) ( 122 ) 0.19 1,556 ( 1.69 )

Income tax benefit $ ( 4,680 ) 7.26 % $ ( 10,051 ) 10.93 % $ ( 3,630 ) 5.71 %

Income tax expense (benefit)

$ 1,639 ( 3.73 ) % $ ( 4,680 ) 7.26 % $ ( 10,051 ) 10.93 %

Commitments and Contingencies

4 unchanged sentences

2024 $ 15,710

Thereafter 688

Total future minimum payments due $ 35,311

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.

However, 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.

We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

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.

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.

6 unchanged sentences

International $ 11,111 $ 8,258

Subsequent Events

On March 14, 2023, the Company entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $ 100.0 million to convert a portion of the Term Loans from a floating rate to a fixed rate.

This swap agreement is effective March 31, 2023 and has a term of approximately 4.5 years with a fixed rate in the agreement of 3.969 %.

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.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data