What happened
Shares of EverCommerce (EVCM 1.07%) are making big gains following the publication of the company's fourth-quarter earnings report. The e-commerce specialist's share price is up 25.7% from last week's market close, according to data from S&P Global Market Intelligence.
EverCommerce released its Q4 results after the market closed on March 15, posting sales that topped the average analyst estimate but a net loss for the period when the market had anticipated a profit. The company reported a non-GAAP (adjusted) loss per share of $0.09 on revenue of $161.8 million, while the average analyst target had called for per-share earnings of $0.08 on sales of $157.97 million. Despite the earnings miss, the company's sales beat and forward guidance powered big gains for the stock.
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So what
With sales climbing roughly 22% year over year in the fourth quarter, EverCommerce closed out last year with revenue of $465.3 million -- up approximately 32% annually. It looks like sales growth should accelerate significantly this year.
For the first quarter, the company anticipates sales to be between $157 million and $160 million, suggesting growth of just 10% -- but sales are expected to pick up later in the year. It also anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $27 million and $29 million in Q1.
For the full-year period management is guiding for adjusted EBITDA between $134 million and $142 million on revenue between $680 million and $700 million. Based on the midpoint of its targets, EverCommerce anticipates sales and adjusted EBITDA to grow roughly 48% and 16%, respectively, this year.
Following the earnings release and guidance update, the analyst covering the company for Barclays raised the stock's one-year price target from $9 per share to $10 per share. The Barclays analyst saw steady net revenue retention rates and performance as positive developments for the e-commerce specialist but still maintained an equal weight rating on the stock.
Now what
EverCommerce went public in July 2021 and hit the market at a time when e-commerce businesses were facing headwinds and investors were generally pivoting away from small- and mid-cap growth stocks. Even after the recent post-earnings really for the stock, EverCommerce trades down roughly 53% from the lifetime high it reached shortly after its initial public offering.
With the company valued at roughly $2 billion and trading at approximately 3 times expected forward sales and 31 times expected earnings, the company still has a growth-dependent valuation that could open the door for outsize volatility in the event of turbulence for the broader market. On the other hand, the company is finding success marketing its e-commerce and payments solutions to small and medium businesses and these services potentially have long runways for expansion.
