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Customer Engagement

EngageSmart Announces Third Quarter 2022 Results

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Strong Customer Growth and Adoption Drive Third Quarter Revenue Increase of 42%; Company Increases Revenue Guidance
EngageSmart
  • SMB Revenue up 52% fueled by new customer adds and growth from existing customers
  • Enterprise Revenue up 31% driven by customer go-lives and continued digital adoption

EngageSmart, Inc. (NYSE: ESMT), a leading provider of vertically tailored customer engagement software and integrated payments solutions, today reported financial results for the third quarter ended September 30, 2022.

“The third quarter of 2022 marked our first full year as a public company. Customer demand and appreciation for our solutions resulted in our ability to consistently beat and raise revenue and Adjusted EBITDA guidance each quarter since our IPO,” said Bob Bennett, EngageSmart CEO. “Our third quarter results are a testament to our customers’ success using our solutions, our business model, and the huge need for our offerings in the ongoing quest to digitize business and consumer engagement in legacy industries. Our results speak for themselves. EngageSmart delivered record revenue of $78.8 million, representing 42% year-over-year growth, all organic, and Adjusted EBITDA of $13.2 million, which is 16.8% of revenue for the quarter.”

“We remain focused on delivering strong revenue growth with balanced profitability, and are pleased with the continued momentum, stability, and durability we experienced in both segments of our business,” stated Cassandra Hudson, EngageSmart CFO. “SMB delivered outstanding revenue growth of 52% year over year driven by high demand for our solution in mental health and continued traction in new verticals, such as speech-language pathology and occupational therapy. Enterprise achieved robust revenue growth of 31% as we implemented our solutions with new billers in utilities, insurance, and tax, and continued to drive higher digital adoption rates with existing customers. Our large market and runway in SMB and Enterprise remain compelling, and we look forward to executing on the growth opportunities that lie ahead.”

Third Quarter 2022 Financial and Business Performance

  • Total Revenue increased 42% to $78.8 million compared to $55.5 million in the third quarter of 2021.
  • SMB Revenue increased 52% to $42.9 million compared to $28.2 million in the third quarter of 2021.
  • Enterprise Revenue increased 31% to $35.9 million compared to $27.3 million in the third quarter of 2021.
  • Gross Profit was $60.0 million, representing 76.1% gross margin, compared to $41.3 million, or 74.3% gross margin, for the third quarter of 2021. Adjusted Gross Profit was $61.9 million, representing 78.5% Adjusted Gross Profit Margin, compared to $43.0 million, or 77.5% Adjusted Gross Profit Margin, for the third quarter of 2021.1
  • Net Income was $6.8 million, representing 8.6% net income margin, in the third quarter of 2022, compared to net loss of $8.3 million, or 14.9% net loss margin, in the third quarter of 2021.
  • Adjusted EBITDA was $13.2 million, representing 16.8% Adjusted EBITDA Margin, compared to $8.7 million, or 15.6% Adjusted EBITDA Margin, for the third quarter of 2021.1
  • Cash and Cash Equivalents were $293.5 million as of September 30, 2022, compared to $254.3 million as of December 31, 2021.
  • Total Number of Customers increased 26% to 97,800 as of September 30, 2022, compared to 77,400 as of September 30, 2021.
  • Total Transactions Processed increased 31% to 37.5 million compared to 28.6 million in the third quarter of 2021.
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1Reconciliations of GAAP to non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin, as well as definitions for the non-GAAP financial measures included in this press release and the reasons for their use, are presented below.

Financial Outlook

FY’22

Guidance

Revenue (in millions)

$300.5 – $302.0

Adjusted EBITDA (in millions)

$46.5 – $47.5

With the information available as of November 3, 2022, we are providing the above guidance for the full year of 2022, based on current market conditions and expectations. This guidance is subject to various important cautionary factors referenced in the “Forward-Looking Statements” section below.

A reconciliation of Adjusted EBITDA guidance to net income (loss) on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to interest (income) expense, net, benefit from income taxes, depreciation, amortization of intangible assets, transaction-related expenses, the fair value adjustment of acquired deferred revenue, stock-based compensation, and restructuring charges, all of which are adjustments to Adjusted EBITDA.

Webcast and Conference Call Information

EngageSmart, Inc. (NYSE: ESMT), a leading provider of vertically tailored customer engagement software and integrated payments solutions, will report third quarter 2022 financial results before the market opens on Thursday, November 3, 2022. Management will host a conference call to discuss the results at 8:30 a.m. ET.

The conference call will be webcast live on EngageSmart’s investor relations website at https://investors.engagesmart.com/events-and-presentations/events/. A replay will be available on the investor relations website following the call.

For investors and analysts wishing to participate in the call, the dial-in numbers are (800) 267-6316 for domestic callers and (203) 518-9783 for international callers. The conference ID is ENGAGESMART, and the program title is EngageSmart Q3 2022 Earnings Call.

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