EngageSmart, Inc. (NYSE:ESMT) Q1 2023 Results Conference Call May 4, 2023 8:30 AM ET

Company Participants

Josh Schmidt - IR

Bob Bennett - Chief Executive Officer

Cassandra Hudson - Chief Financial Officer

Conference Call Participants

Tyler DuPont - Bank of America

Tien-Tsin Huang - JPMorgan

Terry Tillman - Truist Securities

John Davis - Raymond James

Scott Berg - Needham

Operator

Good morning. Thank you for attending today's EngageSmart First Quarter 2023 Earnings Call. My name is Todd, and I will be your moderator today [Operator Instructions]. Please note, this call will be recorded, and I will be standing by if you should need any assistance.

I'll now turn the call over to Josh Schmidt of EngageSmart. Josh?

Josh Schmidt

Thank you. Good morning, and welcome to our first quarter 2023 earnings call. With me on the call today are Bob Bennett, Chief Executive Officer; and Cassandra Hudson, Chief Financial Officer. Our earnings press release, supplemental presentation and associated Form 8-K can be found at investor.engagesmart.com. During this call, we will be discussing certain forward-looking information. Actual results could differ materially from those contemplated by these forward-looking statements. Please refer to the Risk Factors section of our annual report on Form 10-K and other SEC filings for more information on the risks regarding these forward-looking statements and risk factors associated with our business. All metrics discussed during this call are non-GAAP unless otherwise noted. A reconciliation of non-GAAP metrics to the nearest GAAP metric as well as statements regarding why management believes these measures provide useful information can be found in our earnings press release and supplemental presentation, both of which are available on the Investor Relations section of our website. This call is being webcast live and will be available for replay on our website at investor.engagesmart.com.

I would now like to turn the call over to our CEO, Bob Bennett.

Bob Bennett

Thanks, Josh. Good morning, everyone, and thank you for joining us on our first quarter 2023 earnings call today. We are thrilled to kick off the new year with an excellent first quarter that showcases the strength and resilience of our business model. EngageSmart delivered our seventh consecutive quarter of record revenue, which is $88.4 million, representing 31% year-over-year growth, all organic, and record adjusted EBITDA of $17.3 million, which is an adjusted EBITDA margin of 19.6%. Our teammates' hard work and unwavering dedication to excellence have been instrumental in driving our success and enabling us to deliver exceptional value for our customers. Throughout the first quarter, we continued to see sustained demand and favorable secular trends across both segments of our business. We also continued to make progress in driving product innovation, further solidifying our market position. As we move forward in 2023, our focus on simplifying customer and client engagement is paying off, and we continue to expand our reach across all verticals. Before Cassandra dives deeper into the details of our financial performance and our outlook for 2023, I'd like to share some first quarter highlights. The high demand for mental health care and the shortage of professionals presents a unique opportunity for our SMB segment to make a meaningful and positive impact, Driven by new customer adds and favorable transaction revenue, SMB achieved revenue growth of 36% in the first quarter.