Q4 2023 EverCommerce Inc Earnings Call
Participants
Brad Korch; SVP and Head of Investor Relations; EverCommerce Inc
Eric Remer; Chairman of the Board, Chief Executive Officer; EverCommerce Inc
Marc Thompson; Chief Financial Officer; EverCommerce Inc
Matthew Feierstein; President; EverCommerce Inc
Bhavin Shah; Analyst; Deutsche Bank
Ryan MacWilliams; Analyst; Barclays
Alexander Sklar; Analyst; Raymond James
Alexei Gogolev; Analyst; J.P. Morgan
Mason Marion; Analyst; Jefferies
Clarke Jeffries; Analyst; Piper Sandler
Dan Bergstrom; Analyst; RBC Capital Markets
Presentation
Operator
Thank you for standing by, and welcome to EverQ Commerce's Fourth Quarter 2023 earnings call. My name is Daniel, and I will be your operator for today. After the speakers' presentation, there will be a question and answer session to ask a question. During the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised.
To withdraw your question, please press star one one again. As a reminder, this conference call is being recorded today, Thursday, March 14th, 2024. And I would now like to turn the conference over to Brad Coach, SVP and Head of Investor Relations for EverQ comments. Please go.
Brad Korch
Good afternoon, and thank you for joining today's call will be led by Eric creamer everCommerce was Chairman and Chief Executive Officer, and Mark Thompson ever Commerce's Chief Financial Officer, joining them for the Q&A portion of the call as ever, Commerce's President not fireside This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended December 31st, 2023.
For a link to the live or replay webcast, please visit the Investor Relations section of EverQ commerce website, www.commerce.com. Slide presentation and earnings release are also directly available on the site.
Please turn to page 2 of our earnings call presentation. While I review our Safe Harbor statement, the statements made on this call and contained in the earnings materials available on our website that are not historical in nature, may constitute forward-looking statements.
Such statements are based on the current expectations and beliefs of management and actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements, except as required by law, we also refer to certain non-GAAP financial measures to provide additional information to you.
Our investors and reconciliation of non-GAAP to GAAP historical measures provided in both our earnings press release and earnings call presentation. I will now turn it over to our CEO, Erik reamer.
Please continue.
Eric Remer
Thank you, Brad. On today's call, I will highlight fourth quarter results discuss ever commerce a strategic transformation optimization initiatives, which includes the recently announced sale of our fitness assets, and finally, end with a discussion of our key customer trends before turning the call over to Mark to dive deeper into our financials at its core, EverQ commerce provides business management software that supports end to end business processes for service SMBs. Our SaaS solutions support highly specialized workflows in each of our verticals, enabling our customers to automate manual processes, generate new business and create more loyal customers our solutions, our ERP tools for our customers that are critical to our customers' businesses. We enhanced the value of our business management solutions by upselling cross-selling additional features such as robust payments, integration, customer engagement solutions, fee generation and group buying programs.
Keeping to our mission statement, we are simplifying the lives of those service providers that support us every single day full year, revenue growth was 9%, and most importantly, we significantly expanded margins throughout the year. Our 2023 adjusted EBITDA margins of 23% represented 380 basis points of expansion when compared to 2022, an absolute 2023 adjusted EBITDA grew 30.7%, 2023, exceeding guidance given one year ago by $17.6 million at the midpoint.
Turning to our fourth quarter highlights, our fourth quarter adjusted EBITDA also exceeded the top end of our guidance range. Adjusted EBITDA grew 22% year over year and equated to a 25% margin. As you've highlighted in the past, we've seen headwinds in the more transactional aspects of our business, and this was true in the fourth quarter as well. Specifically in our marketing technology solutions revenue streams due to both macroeconomic pressures and weather that impact our martech revenue was down nearly 10% year over year impacted overall revenue growth rate. Consolidated revenue growth in the quarter was 5%. Subscription and transaction revenue, which excludes marketing technology services, was approximately 10% with sustained growth and profitability, we are creating the opportunity to incrementally invest in higher growth, higher margin, larger market opportunities. One of our biggest opportunities is to invest to drive growth in payments driving payments adoption continues to be a key element of our strategy. And for the fourth quarter, we increased our payment revenue by 20%.
Before we dive deeper in our fourth quarter performance, I want to highlight an important transaction we announced yesterday will impact our business moving into 2024. We signed that agreement that result in ever commerce exiting the fitness vertical, as we've discussed publicly for the past 12 to 24 months, the fitness vertical is less than 4% of our total revenue, but it's one of our most competitive markets and our solutions have not recovered to pre-COVID levels of operation. This has resulted in your flat revenue performance, negatively impacting the overall growth rate and creating a drag on our consolidated profitability. We believe that selling our fitness offer solutions to leading large player in the fitness space is the best outcome for our customers, employees and investors. This enables us to allocate resources to a higher growth, higher margin, larger market opportunities within m-commerce, the sale of the North American finished assets closed yesterday. While we expected the sale of international assets will close following regulatory approval in Q3, we will exclude the finished assets and the guidance Mark will provide in a few moments. So comparing growth rates and important to note that these assets contributed approximately $24 million of revenue in 2023 at a breakeven contribution to adjusted EBITDA. Seller finished assets as the first step in our plan to simplify our business and invest in assets that can provide the best growth and strongest returns for shareholders.
In addition to this sale, we were also taken steps to transform and optimize our operations. In the fourth quarter, we engaged a third-party adviser to help us assess our operations and identify specific initiatives and strategies to simplify, optimize and better scale our operations. With this we will sharpen our customer centric vertical market focus to better position us to accelerate growth through our two main components to this program. First, we'll be doubling down on our customer-centric vertical go-to-market structure, increasing investments in our key verticals such as ever, Pro and everything else. This includes simplifying our organizational structure and consolidating products and legacy brands as well as invest in our go-to-market engine. Our ongoing consolidation of solutions within ever Health, which began last year was really the beginning of this evolution with help from our third party advisors. We developed plans to fast track similar strategies BeneVir Pro. We believe this will help us improve our execution by streamlining functions, ranging from sales, marketing, product development and really help accelerate growth in 2025 and beyond, as well as improve our ability to allocate capital while also enhancing our customer experience.
Second, we're going to continue to optimize our operations and cost structure and a proven scalability, which will help fund key growth investments and allow us to continue expand margins and cash flow generation over the coming years.
As I mentioned, we completed our initial assessment in the fourth quarter 2023 have already begun implementation of several initiatives. We expect these transformation optimized optimization initiatives to continue through the next 18 to 24 months.
Turning back to our fourth quarter highlights, we continue to execute on our land-and-expand strategy. We land with the core business management software and then upsell cross-sell our existing customers, additional features, services and products. This enhances our value to our customers receive from relationship with ever commerce and drives additional revenue, as is shown in various examples in previous earning calls, this translates to lower churn and higher retention. As of the end of the fourth quarter, we continued to see an increase of customers utilizing more than one solution to approximate 82,000. In addition, the number of customers that have contracted onboarded for two or more products grew 26% year over year to approximately 183,000 payments enabled customers in this grouping represented significant near term opportunity for payments, processing and payments revenue growth for our e-commerce customers that purchase and utilize more than one solution. Our national silver most profitable and stickiest customers. This is because we provided significant value to them and their businesses. This fact presents itself through strong net revenue retention.
Looking back over the trailing 12 months, our annualized net revenue retention or NRR for our core software Payment Solutions was 100%. Embedded payments is our most accretive cross-sold solution and stands to be a long-term driver for EverQ versus revenue growth and margin expansion. Year over year, our Payments revenue grew 20%, accounting for approximately 70% of our overall revenue. We'll report our Payments revenue on a net basis. And as a result, payments revenue contributes approximately 95% gross margin. There's a meaningful contributor to our overall adjusted EBITDA margin expansion. Fourth quarter annualized total payment volume or TPV was approximately $11.9 billion, representing 9% year-over-year growth. We expect TPV and overall payments revenue to grow as we continue to embed our payment solutions in our core system of actions.
I'd like to end my portion of prepared remarks by highlighting our organic growth opportunity for the company that we're incredibly excited about ever ProAg ever ProAg is a new solution that provides customers the opportunity to save, learn and grow creative community and trusted brand for engagement with them. The genesis of ever ProAg was a customer rebate program that existed within our home and field service solution set. Because of the SMB nature of our customer base, they lack the buying power of typical mid-size enterprise scale business operations now to their association with ever commerce. Our customers can benefit from the collective buying power of more than 300, 50,000 home and fees, field service providers. Our customers will benefit from real savings in parts and supplies to our repurchasing. And for EverQ commerce, we benefit from a revenue share of the rebates and the increased value. Our customers see from the use of our software as part of the ever Pro edge community. Our customers also receive targeted business growth and education content to help them drive performance to the business over time, we believe ever ProAg has ability to accelerate revenue forever commerce and decrease churn as customers realize more value than we ever commerce ecosystem. However, ProAg was launched in the second half of 2023 to our joint customer base. And today, we have over 75 hundred customers using it in 2024. We will expand this solution to additional system of action.
Now I'll pass over to Mark, who will review our financial results in more detail as well as provide first quarter and full year 2024 guidance Thanks, Eric.
Marc Thompson
Total revenue in the fourth quarter was $169.4 million, up 4.7% from the prior year period. We continue to experience demand driven headwinds in our marketing technology solutions. We also experienced slower growth in our fitness solutions, underscoring our decision to part ways with this piece of our business. Within total revenue subscription and transaction revenue was $133.5 million, up 9.8% from the prior year period. The revenue for Marketing Technology Solutions was $30.1 million, a decrease of 9.5% from the prior year period. Solid performance in subscription and transaction revenue was largely due to continued execution of our growth strategy to provide customers our core system of action software solutions and driving expansion by promoting cross-sell and upsell opportunities, leading with payments.
To reiterate a point that Eric made earlier full year 2023, payments revenue represented 17% of total revenue, an increase from 14% of revenue for the full year 2022. Full year 2023 revenue was $675.4 million, up 8.8% year over year on a reported basis. And excluding marketing technology and fitness solutions, our growth would have been 12.2% in the fourth quarter. We continued to deliver on our full year 2023 objectives by exceeding EBITDA guidance and achieving record EBITDA margins. Fourth quarter. Adjusted EBITDA was $43.1 million, representing a 25.4% margin versus 21.7% in the fourth quarter of 2022 and 22.4% growth year over year. Adjusted EBITDA performance in the quarter was underscored by our focus on actively managing our operating expenses, driving operating leverage and cash flow generation. Additionally, full year 2023 adjusted EBITDA was $155.6 million, representing a 23% margin and a 30.7% increase compared to 2022 2023. Full year adjusted EBITDA finished $17.6 million or 12.8% higher than the midpoint of our initial 2023 guidance given approximately a year ago. Adjusted gross profit in the quarter was $114 million, representing an adjusted gross margin of 67.3% versus 66.7% in Q4 2022. Full year 2023 adjusted gross profit was $444.4 million, representing an adjusted gross margin of 65.8%. The increase in gross margin is partially attributable to an increasing mix of higher-margin payments revenue and a decreasing mix of lower-margin marketing technology solutions revenue.
Now turning to operating expenses, adjusted sales and marketing expense was $29.6 million or 17.5% of revenue, up from 17.2% of revenue reported in the prior year period due to timing of spend, we had anticipated a modest sequential increase in sales and marketing expenses going into the fourth quarter. Adjusted product development expense was $18.3 million or 10.8% of revenue, in line with the prior year period. Adjusted G&A expense was $23 million or 13.6% of revenue, down from 16.9% of revenue in the prior year period. Adjusted G&A costs declined both as a percent of revenue and in absolute dollars as we continued to achieve cost savings from ongoing consolidation activities benefit from the reduction in force announced last quarter as we had and as we anniversary the investments made in 2021 and 2022 to support our public company infrastructure. We continue to generate significant free cash flow as we invest to grow our business. Levered free cash flow was $29.8 million in the quarter. This was up approximately $7.1 million or 31.3% year over year due to both growth in operating income and changes in working capital. For the trailing 12 months, levered free cash flow was $81.5 million, which represents a 12.1% margin and a 74.5% increase over the prior year, continuing to underscore the efficiency of our business and enhancing our balance sheet flexibility. Strong free cash flow generation allows us to continue to invest in our growing business and deliver strong returns to our shareholders. It also allows us to efficiently allocate capital across a spectrum of opportunities, including outstanding buyback authorization and M&A prospects. In the fourth quarter, we repurchased approximately $2.7 million shares for a total cash consideration of approximately $26 million at an average price of $9.65 per share. As of December 31st, 2023, we had approximately $40 million remaining in our repurchase authorization that runs through year end 2024. We ended the quarter with 92.6 million in cash and cash equivalents, and we maintained $190 million of undrawn capacity on our revolver. Our debt as a combination of floating and fixed rate and total net leverage as calculated per our credit facility at the end of the quarter was approximately 2.6 times, consistent with our financial policy, we have no material maturities until 2028.
I would now like to finish by discussing our outlook for 2024. We're pleased with our ability to actively manage bottom line results that exceeded expectations as demonstrated by our record adjusted EBITDA margins. However, we were disappointed in our slower growth impacted by revenue headwinds in certain parts of our business we believe ever commerce is undervalued in the market, and we take our fiduciary duty to create shareholder value very seriously.
As yesterday's announcement regarding the sale of our fitness assets illustrates we are not and will not be shy about taking additional actions to simplify our business or increase growth and margins to unlock value as we navigate this transformation and the future of ever commerce without a fitness vertical, we expect 2024 to be a transition year. While growth may be more muted, we will further expand margins and profitability. A portion of these efficiency gains will be used to reinvest in our products with the goal to accelerate growth in 2025 and beyond.
The following non-GAAP guidance excludes our fitness assets which, as we stated, contributed approximately $24 million in revenue and near zero contribution to adjusted EBITDA in 2023. Our guidance also assumes zero growth in our marketing technology solutions on a full year basis. For the first quarter of 2024, we expect total revenue of $160.5 million to $163.5 million, and we expect adjusted EBITDA of $36 million to $38 million. For the full year of 2024, we expect total revenue of $676 millino to $696 million and adjusted EBITDA of $167 million to $176 million.
Before we begin the question and answer period portion of the call. I want to thank the entire ever commerce team for their efforts in delivering bottom line results that exceeded expectations despite the challenging environment, our focus for 2024 continues to be centered on balancing growth with profitability and the transformational initiatives we described today should allow us to do that in a way that preserves continued margin expansion while allowing for growth acceleration in 2025.
Operator, we're now ready to begin the question-and-answer section of the call.
Question and Answer Session
Operator
As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one. Again, Please standby while we compile the Q&A roster. Our first question comes from Bhavin Shah with Deutsche Bank. Your line is now open.
Bhavin Shah
So great. Thanks for taking my question. Tim, I appreciate the comments you've talked about on the marketing side of the house. Can you maybe just elaborate a little bit more on the core business software and what you're seeing maybe from a new logo side and then retention aspect any changes that you're seeing relative to last few quarters from a demand perspective on programs?
Eric Remer
Well, I appreciate the question. Thank you so much from Matt, you want to take that?
Matthew Feierstein
You know, I think quarter over quarter, I don't I don't I wouldn't say there's any significant changes in trends from a demand standpoint. Again, we've talked about how we go to market, largely digital acquisition based in both pro and health and not a significant change from a trend standpoint there from a new customer acquisition standpoint, obviously, we also remain incredibly focused on customer expansion, certainly pleased but see a lot of opportunity for growth specifically on the payment side of the house. And you heard our comments about ever Pro Edge specifically on the pro side being a real opportunity for growth that we see in the future. So no major change in trends that we've seen quarter over quarter.
Eric Remer
I'd just add to that on either the customer acquisition or on the customer retention. It seems a pretty steady for the last several quarters.
Bhavin Shah
That's helpful, Dan and Eric, maybe just given the demand backdrop, particularly on the marketing side of things and now the elevated focused on on ever Pro and every house, given the sales softness, how if at all, does that change how you're thinking about the timing or the size of M&A kind of going forward?
Eric Remer
I've got another great question. I mean, we've always going to be a focus in open to opportunities in Q4 on November, we closed the deal focused within the ever Pro vertical. And we think, again, ever Health have approached us big opportunities that we see a situation, an asset that makes sense that we think can accelerate both growth and overall value to our customers. We'll continue to look at those. So we remain active when they make sense, but we're going to be very focused on those specific verticals that we think are going to have the biggest acceleration opportunities.
Bhavin Shah
Appreciate. Thanks my questions.
Operator
Thank you, Shlomo, for our next question. Our next question comes from Ryan MacWilliams with Barclays. Your line is now open.
Ryan MacWilliams
Thanks for the question, and great to see the focus on doubling down your strengths well and driven from operational efficiencies from here, Eric, how do you view the potential for other areas of perhaps portfolio rationalizations or potential sale of assets from here?
Eric Remer
Thanks, Ryan, for the question. Yes, I again, as Mark said really well is we're always going to be focused on maximizing value, both obviously for the operations and for our shareholders. And it will continue to monitor what makes the most sense organizationally, I do think, as we've said several times already in the call in our prepared remarks that ever-growing MemberHealth are really great verticals and really great organizations with excellent Tier one software as an opportunity to really grow. So those are the areas that we are double tripling down. We do have very good solutions also in are set out in our salons by assets within the ever well, which was finished was a part of you know, those are kind of stand-alone. Those are growing at really nice cases and provide really great value to our customers as well. So those three areas without kind of a vision where we kind of talk about ever Pro and MemberHealth much greater than on the ever well, it's just the percentage of business that we have. That represents about 75% of our business and the greatest opportunity for us to grow going forward. And so we'll always look for rationalizations that where it makes sense. We talked about some of the areas that have been drags on our business, and we'll continue to monitor those to see if there is an opportunity on, again job to accelerate growth investments as well as increased shareholder value.
Ryan MacWilliams
It's one to one for Mark. How do you feel about the growth rate of the marketing technology assets from here, like you feel like you've seen the worst of the macro impact at this point and do you view these marketing technology as a core part of the effort kind of portfolio or be separate from like a movie to add-ons like an ever Pro or an ever health customer?
Marc Thompson
Thanks. So look, I mean, obviously, as we shared in our guidance or in our guidance comments, thinking about the trend that that was this year, flat thinking about that into next year?
We're always trying to be prudent with our guide, but you do it around this this particular solution set. We have seen volatility. There is a lot of exogenous demand-driven variables that are that are harder to predict in that business we do. Having said that, I do think we sort of talked about in the second half of last year stabilization there. And I think our performance to be quite honest, no, we feel pretty good about our performance in terms of stabilizing the operation. I think going into this year, the team has some nice ideas on how to reduce some of the volatility on the revenue side and continue to work hard on margin. So we're doing that doing the best we can relative to the backdrop. And I think we have positioned ourselves for upside. Should it come from from some of those extra charges as positive factors, hopefully, with the macro tailwinds instead of headwinds? And I'll tell you, I'm just going to say on that under the other part of your question, Ryan, the marketing technology, the investment thesis there remains true. These are solutions that are SMB service providers you need they are a third derivative. And when we talk about driving dollars the door, our highest growth, largest market opportunities, we always lead with payments because of the scalability and the profitability and the TAM available to us in that regard as some of our horizontal SaaS solutions fall into that same category marketing technology solutions that that cross-sell motion is a different motion and requires more investment to get there. So it we don't think of it as as something that's not required by our customers. We think of it as somebody that absolutely is when we work to connect those dots.
Eric Remer
But I would say it is that third derivative, if you will just add, I think smart data, Ryan, it's a great question. U.s. is a core answers, not core in the sense of the core part of our business. We've said this over and over again providing customer-centric vertical software to service base SMBs. That's the core that's the core of everything we do, providing additional value to enhance and their value as well as provide more success is where marketing came in, unlike payments, where we've done right off the bat there really good job integrating and penetrating the market. Martech has been a little slower to kind of make that uptick. So it is an add-on versus kind of core to what we do, but we'll continue to kind of work done. They get better on sell through our ecosystem.
Ryan MacWilliams
Really great color there, I guess. Thank you.
Operator
One moment for our next question. Our next question comes from Alexander Sklar with Raymond James. Your line is now open with.
Alexander Sklar
Great. Thank you. I'll just one for me. I don't know, Eric or Matt, I just wanted to see what have you seen in terms of kind of deal sizes or expansion activity with some of the solutions that you already went through the brand consolidation win that that's helping you kind of push forward with the ever pro side in terms of driving further brand consolidation?
Matthew Feierstein
Thanks. Yes. I mean, as we've talked about in the past, we're obviously further along from from an overhead standpoint. We've seen nice success is playing on our thesis of core system of action with those integrated value add solutions in ever health. That's been the integration of our claims clearinghouse, the integration of our patient engagement solutions and the integration of our patient pay capability. Just the core core payments from that standpoint, and we've seen nice progress across all of those. The integration of our core claims clearing house continues across multiples of our systems of action there, and we're actually through that in one of them and making nice headway in another payments from that perspective is we still have penetration opportunity there, but we've done a really, really good job there. So all of that says, you know, thesis, we see that this has come through in terms of core system of action with value, add solutions add-on again and never Pro as we think about it. You know, we're in a place where we have a little bit less of that product consolidation done. It's going to look a little bit different, but what we have done and ever Pro is obviously our Pro is core in our system of actions, systems of access solutions, sorry where we have integrated payments. And obviously the majority of our payments integration work has already been done done there from that perspective, so that we talked about the pro edge, that will be another value add solution that again, as we consolidate products think about those value add solutions being more integrated into those systems of action. So hopefully, that gives you a little bit of color. We've definitely learned a lot that ever health, but we're not starting from zero from a consolidation standpoint it ever Pro. We've done that with the value-add solutions already.
Eric Remer
Thanks, Matt. I'd just add that it's a great question. It's for when you think about what we've done with the consolidation of MemberHealth and Matt said, really well connecting the dots with all those core solutions for new customer acquisitions, ARPUs increased 13% year over year. So we are seeing those customers spending more money with us as it utilizing more products and services.
Alexander Sklar
Got it. That's great color and great data point and that's not hard to deal that. And thank you.
Operator
Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Alexei Google of with J.P. Your line is now.
Alexei Gogolev
Hello, everyone, and Eric, thank you for these comments in your prepared remarks about the first steps that you are taking to transform the business. I was wondering if you have any thoughts about what might be the next step. I think Mark outlined that 2024 will be a transition year. Anything you could maybe elaborate on what and some of the steps in terms of simplifying the business may take in the near term?
Eric Remer
Well, thank you for the question, and it will be the first step, as I talked about was that Mark brought up in detail was the sale of our Finnish assets as we kind of looked at reduced the perimeter of the organization and focused our resources on both people and dollars into investments into those core solutions that we believe that the largest growth opportunity that's part of the transformation. We continue to talk about that vertically Centric Software Solution focused on helping that service SMB more success and be more successful. So investments in products and go-to-market in the core verticals that we feel very strong about. And so that's kind of the external internally. It's better organizing. The transformation is organizing within within the verticals to make sure that we reduce friction. We have better alignment and better products and better go-to-market for those customers.
When you think about optimization, I mean that's something we've done very well the last few years, and this is an extension of that you think about over the last few years, we've increased our EBITDA margins by almost 700 basis points. And so when you think about our ability to expand those margins that's the ongoing optimization of the organization. And we're actually have kind of really double down on that in terms of focused on those, both that none of the low-hanging fruit. But those areas that we see that we can generate more optimization, which is why we've expanded our kind of guide from a EBITDA margin this year as well to mentor them.
Marc Thompson
But those wells that I think you know, the the sharpening the focus is all about not just optimizing for the bottom line, but also positioning for the for the top line.
Well, actually, particularly in terms of allocating capital across our solutions. I think you know what we're doing in ever Health, which is sort of the leading edge of the wedge. If you will around brand and product consolidation, we're able to see real efficiency gains, much sharper focus, really starting with the customer in towards our operations. So identify the ideal customer profile work backwards from there and make sure we're delivering customer frictionless set of solutions. They need to completely run their business and enhance their workflows, drive digital payments, grow their business, et cetera, thank you. And a follow-up question for Mark. And I was wondering how much of a tailwind have you incorporated from our Pro edge and from the Kickserv acquisition in May 2024 guidance, did you say tailwind a tailwind there?
Very preliminary, I'm assuming. Yes. Well, Kickserv, as you may recall, is a very small tuck-in acquisition. It is baked into the guide three candidates, not a needle mover in and of itself. That's what we've described. And we talked about the acquisition in terms of ever. Pro edge started from a base of 0.4 in the middle of last year. We've grown it very nicely in really what's been six to nine months. I think we've got more than 7,000 customers using that it's a very high margin opportunity. So it's still early days there, actually, but we also do have that built-in storage.
Eric Remer
I'd like to think about really as we build that momentum and the opportunity of our rapid progress, even though it's relatively small, the reason I bring it up the opportunity to expand in multiple additional solution sets as well bring in additional products so far right now, we're selling really into one solution with one product. So as we look to expand that again throughout 24, I think we'll see the acceleration in terms of real needle mover revenue potential into 25 versus 24, where we're still making those investments into the into the solution side.
Alexei Gogolev
Thanks very much.
Operator
Thank you. One moment for our next question.
Our next question comes from Mason Marion with Jefferies. Your line is now open.
Mason Marion
Hi. Thanks for taking the questions today and the payments can grow well, is it more from a macro perspective? If you look at it kind of going to TPV per customer basis, what trends are you seeing there are are your individual customers reducing spend on average, are you seeing any signs that perhaps there could be some inflection going forward?
Marc Thompson
Yes, I appreciate the question. Obviously, that's something that we track closely. Obviously, seasonality across our different sectors does impact that, but we don't see anything out of the normal in terms of that. And obviously, that's a focus for us. Growing TTV per customer is something that, you know, is one of the core growth lever growth levers in our payments program, so no exogenously, no, no, no, nothing outside of seasonality that we see from an impact as we head into it, finished Q1 and headed into Q2. And that is a real lever for us to continue to push on from a customer success standpoint to continue to expand our customers' revenue through payments expansion.
Mason Marion
Thank you.
Operator
Thank you, Juan, for our next question.
And our next question comes from Clark Jeffreys with Piper Sandler. Your lines now.
Clarke Jeffries
Hello, thank you for taking the question. First is a question on the residual assets in the wellness portfolio. How are you viewing viewing those assets between the fitness and wellness, the remaining wellness assets. Maybe any kind of color on what those assets are now?
And then a second question is, Mark, it seems like the progression of adjusted EBITDA and unlevered or levered free cash flow has been pretty consistent. Those kind of been in lockstep with each other. Do you expect that to continue in the coming year?
Eric Remer
Yes. Thanks so much for the question. I'll start with the first one.
Yes, that you mean endeavor well are really focused in salon and spa, which unlike the fitness, they came right back on when COVID coped with the COVID kind of vote and it for all intents purposes, we saw specifically in salons when a when a state would turn back on that, you can go to a salon they went back up to 100%. So we really like those assets we have there. We have two main assets, one-time leave the other one one. This time was kind of our global solution were salon business is more domestic, really great solutions with both really great growth rates. We continue to invest in both of those both new customer acquisition as well as integrated payments. So we're excited about the category, and we think that category has got a long, long runway of growth in front of us.
Marc Thompson
As to the question on on adjusted EBITDA and free cash flow generation?
Yes, this has obviously been a primary focus all year. We felt like we committed to that for our Board and our investors coming into 23. We feel very good about our performance in terms of driving efficiency into the business and optimizing our business as well as driving and improving scalability in the operation to better position us for growth down the road. So everything that we began and continued to do through the year of 23, we've sort of doubled down on that. If you will through the transformation optimization initiatives that Eric mentioned within obviously driving efficiency on that bottom line really relates as much to the optimization that is as it does for the transformation side. But as we continue to sharpen our focus, consolidate our operations around brands and products, invest appropriately and drive more scalability and have identified, you know, a pretty long list of a variety of different initiatives that we can do to continue to drive efficiency into the business. I think you see that reflected in the guide for right now. We're committing to driving increased profitability this coming year. And I think harking back to kind of our thoughts on the mid and long term when we took the business public, we always felt very good about our ability to drive operating leverage through the business as we drove scale. And as we got over the hump, particularly of a lot of investments we needed to make as we went public and then began operating as a public company. So a lot of work we're very focused on here in 24 and beyond over the next really one to two years to continue to look to grow into that motion preservation at the very much.
Operator
Thank you. One moment for our next question.
Our next question comes from Dan Bergstrom with RBC Capital Markets. Your line is now open.
Dan Bergstrom
And It's Dan Bergstrom for Matt Hedberg.
Thanks for taking our question. Just on payment adoption and an earlier question. I know you tried out some different strategies to drive payment adoption last year with mandates, et cetera. Is there anything that you really learned from that testing that you're leaning on more and 24 here to drive payment adoption?
Marc Thompson
Yes, great question. Thanks for the follow-up on that, absolutely, we've tested mandates across multiple solutions and certainly learned a lot in terms of you know what percentage of uptake we got on those mandate, how to position the mandate. And we've actually pulled that forward into how we think about the using similar tactics in 2024. Obviously, there's a variety of different things that we are thinking of from a payment attach standpoint. Obviously, it goes beyond mandates, it goes to pricing, packaging, et cetera. And so, um, you know, definitely we're obviously everything we do going forward is a function of what we've learned. We're very test and learn focused and did pick up a bunch of points from those mandates that we'll be driving forward in 24.
Dan Bergstrom
That's great. Appreciate the color. And then maybe for Mark again to build off of previous previous question on the guidance range for 24. Maybe what are some of the underlying assumptions or what what could work?
Well, that could push results, say towards the upper end of the range?
Well, I think it's a few things, obviously, on the top side of things, continuing on revenue, continuing to invest in our in our core strategies within our core solutions systems of action and integrating payments and things like ever, Pro edge new add-on features that could drive both growth and profitability and frankly, improved retention in our and our investments we're making year over year are always as much about acquiring new customers as much about investing in our ability to expand our customer relationships and also really improved features. Functions remain competitive and drive improved retention. Obviously, when you sell more than one solution to our customers drive retention, that was. So I think a variety of everything we're doing on the investment side in 24 and particularly in these higher growth, higher margin, higher market opportunities, I think is all geared towards positioning us for upside. So we're driving the investment dollars and we're taking the actions and execution could could certainly improve our ability to drive that top line. And I do think as I mentioned on marketing technology, we are being prudent in our guide. It is we do see stabilization, but the world is not in our control. I do think there could always be upside there, and we'll certainly well-positioned for that. And I think as I mentioned earlier, the team has done a really nice job of managing through a really murky environment last 18 to 24 months. On the bottom line. I think we've demonstrated through this year and really over the last 18 to 24 months, just as we had said, we were going to overcome the hump of the infrastructure costs we needed to make the investments we needed to make to get and be public. I think we've delivered on that and some and I think we're positioning ourselves to deliver on that. And this year with real confidence in building that into our guidance. But obviously, we can't work fast enough to drive more efficiency and scalability of operations into the business. And we're doing that as quickly as we can, but there could be upside there from a variety of different initiatives we have going on internally as we continue to to transform and optimize the business. This year and next.
Eric Remer
And just to add to that, when you think about some of the opportunities that we continue to work on that we think will both drive growth. The upper end of this year as well as into next year. I think we have over 700,000 customers over 300,000 of content field service contractors, almost 100,000 practitioners in the ever health. We have a massive amount of small business customers that utilize our core solutions to run the business every day. Our opportunity to provide more value to them through additional services products and solutions. We are still in them early innings of that. And fortunately, that's a very large base. So it gives us a lot of a lot of runway to grow with. But those are the things that we focus on every day. How do we provide more value to those customers obviously makes them more successful, provides more revenue there, commerce.
Marc Thompson
Thank you.
Operator
Thank you. I'm showing no further questions at this time. I would now like to turn it back to Eric agreement for closing remarks.
Eric Remer
But I appreciate everyone joining the call today on e-commerce continues to balance growth and profitability. And as we said several times, as we look toward 2024, I'm very excited to continue the implementation of our transformation and optimization initiatives will both accelerate growth while expanding our margins. So thank you guys so much for joining today.
Operator
This concludes today's conference call, and thank you for participating.
Marc Thompson
You may now disconnect.
