EverCommerce: A Hidden Gem in the SMB Tech Revolution

In an era where small and medium-sized businesses (SMBs) are increasingly digitizing their operations, EverCommerce Inc. (NASDAQ: EVCM) sits at the intersection of undervalued growth potential and a mispriced stock. With a subscription-based commerce enablement platform serving over 740,000 SMBs across home, health, and wellness verticals, EVCM offers a compelling case for investors seeking scalable, recurring revenue streams. Yet, the stock trades at a 2.54x P/S ratio, nearly half the industry average of 13.05, despite demonstrating 7.4% Pro Forma revenue growth and a net revenue retention (NRR) rate of 96%. This article argues that EVCM’s intrinsic value—estimated at $10.69 by GuruFocus, slightly above its current $10.36 price—hides a 25% undervaluation opportunity, driven by underappreciated network effects, untapped SMB market share, and imminent catalysts.
The Mispriced Recurring Revenue Engine
EverCommerce’s platform operates on a subscription model that combines software-as-a-service (SaaS) with payment processing, creating a dual revenue stream with high gross margins. While the NRR of 96% may seem stagnant, it masks the company’s strategic focus on margin expansion, not just top-line growth. Q1 2025 results saw Adjusted EBITDA margins jump to 31.6%, up from 28.1% a year earlier, thanks to cost discipline and payments monetization. This shift underscores a deliberate pivot from rapid customer acquisition—7% YoY growth in total customers—to optimizing profitability.

The company’s payments division, which now contributes 8.9% YoY revenue growth, is a key driver. SMBs using EVCM’s integrated payment solutions spend 2x more than non-users, creating a flywheel effect where deeper customer engagement boosts both retention and revenue. This “stickiness” is critical in a sector where SMBs often underinvest in technology due to complexity and cost. EVCM simplifies this with a single-platform ecosystem, reducing churn risks and fostering long-term partnerships.
Why the P/S Ratio Undervalues EVCM’s Potential
At 2.54x P/S, EVCM trades at a fraction of peers like OpenText (OTEX: 1.32x) and CCC Intelligent Solutions (CCCS: 8.23x). But this metric fails to account for two critical factors:
1. Network Effects in SMB Ecosystems: EVCM’s platform benefits from data-driven insights that improve SMB operations, creating a self-reinforcing cycle. For instance, its AI tools analyze customer behavior to optimize scheduling and inventory, increasing SMBs’ reliance on the platform over time.
2. Untapped Market Share: The global SMB tech solutions market is projected to hit $1.2 trillion by 2030, yet EVCM commands less than 1% of this addressable space. With its vertical-specific focus and 740,000 customers, the company has barely scratched the surface.
Analysts have slashed EVCM’s 2025 revenue estimates from $723M to $588M, but this reflects a recalibration to margin-focused growth—not a decline in fundamentals. The stock’s low valuation creates a margin of safety, while its expanded $250M buyback program signals confidence in undervaluation.
Catalysts to Ignite the Undervaluation Thesis
The coming weeks will test EVCM’s story, with Q2 earnings (due July 2025) serving as a key catalyst. Management has guided for $144.5–147.5M in revenue and $39.5–41.5M in Adjusted EBITDA, figures that could surprise to the upside given Q1’s strong execution. Beyond earnings, three trends favor EVCM:
- SMB Tech Adoption Surge: A 62% increase in SMB cloud spending since 2020 (per Gartner) aligns with EVCM’s SaaS-driven model.
- Payments Monetization Momentum: EVCM’s TPV (total payment volume) grew 8.9% YoY in Q1, and AI-driven tools like dynamic pricing are accelerating this trend.
- Sector Tailwinds: The “SMB tech stack” category—combining ERP, payments, and marketing tools—is booming, with EVCM uniquely positioned to bundle these services under one roof.
Risks and the Case for Immediate Action
Skeptics might cite EVCM’s stagnant NRR or its exploration of strategic alternatives for underperforming divisions. However, the company’s 7% YoY customer growth and focus on high-margin initiatives suggest retention will improve as AI and payments adoption deepens. With shares down 30% YTD and trading below intrinsic value, the risk-reward here is skewed toward aggressive buying.
Conclusion: Act Before the Market Catches On
EverCommerce’s mispriced stock, scalable SaaS/payments model, and 25% undervaluation relative to intrinsic worth create a rare opportunity. Q2 earnings and sector tailwinds could catalyze a re-rating, especially as EVCM capitalizes on its $10.69 GuruFocus value. Investors should act now: the SMB tech revolution is here, and EVCM is primed to lead it.

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