Morning, everyone. Welcome to day three of the Stephens Conference. Appreciate everybody for joining us this morning. My name is Chuck Nabhan, for those who don't know me. I cover the Payments & Fintech space at Stephens. Joining me today from EverCommerce is Brad Korch, who's the head of IR. Brad, thank you for joining me today.
Thanks for having us.
Appreciate it. For those that aren't familiar with the story, could you just give us a high-level overview of EverCommerce, the verticals you serve, and the problems you're solving for your customers?
Yes, of course. EverCommerce is a vertical SaaS provider focused on providing business management software to service SMBs. We service approximately 700,000 customers across three main verticals. To understand sort of how EverCommerce came to be and where it is today, it's important to understand where we came from. So EverCommerce, in its current incarnation, was refounded in 2016. Prior to that, our CEO, Eric Remer, founded a company called PaySimple in 2006. And the mission and the purpose of PaySimple was basically to be a horizontal payments platform, right? A thin piece of software that service a lot of customers, basically helping service SMBs, send invoices, get paid quickly, take digital payments. And it was a great business.
It grew from nothing to $25 to $30 million of revenue over 10 years. And it had amassed a decent customer following. As Eric and others of the company would meet with customers over and over again, they kept hearing, as time went on, you know, "Can you do this for me?" You know, "This is great, you take payments. Can you do scheduling? Can you do inventory? Can you manage, you know, manage a fleet?" Or et cetera. And that horizontal software, you know, was certainly not set up to do that. And then, if you think about sort of, you know, payments and where payments evolved over that same time period, the notion of payments, you know, being a commodity or being h ow do you differentiate yourself?
That was certainly in the back of everyone's mind. And so in 2016, recapped the business with a new business plan, which was essentially flip it around and lead with vertically oriented software, business management software, that's targeted towards different verticals within the service SMB space, for them to run their business. So, you know, think, you know, a plumber, you know, his scheduling, his route management, his inventory, his billing, his payments, everything that he would need or she would need to run that business. And then, once you have that, you've got the moat to earn the right to take payments. It becomes a stickier product. And so that was the thesis. Providence Strategic Growth came in, helped fund that thesis.
What EverCommerce did over from 2016 to today, instead of building, you know, many different vertical pieces of software, used M&A to basically accelerate that. So sitting here today, 53 acquisitions later, the company, you know, has solutions in the three verticals are home field services or EverPro business, healthcare, which is in our EverHealth, so, you know, practice management, EMR, et cetera. And then, wellness, which is really broken into two pieces. You've got your fitness, for, you know, gyms, studios, et cetera, and salon and spa.
You know, just to end, I mean, our mission at the company is to simplify the lives of business owners who support us every day, and that really has been the underpinning of everything we do, from the PaySimple days in 2006 to the founding of EverCommerce in 2016 through today.
Yeah, it's interesting because Embedded Finance has become a bit of a buzzword over the past couple years. Sounds like you guys have been doing that since 2016.
Yeah, no, I mean, and embedded is, is the key word there because, having it part of those workflows, having it be just innate in what these business owners do, I mean, these are not sophisticated business owners-
Yeah
... I mean, these are, these are small sole proprietorships. And it, it really, it makes the, the value of the, of the fintech piece that much higher.
Yeah, I think that's a good point that's worth drilling into a little bit, at least on the EverPro side, which I'd like to double-click on in a little more detail. But primarily, you are serving SMBs. I understand you do have some larger gym customers, but could you talk about the segmentation of your customer base by, you know, micro merchant, SMB, et cetera?
Yeah, I mean, you mentioned EverPro, and EverPro is one of the very interesting segments for us for multiple reasons. One is, it's about half our business. We have approximately 300,000 customers in the EverPro space. And really, within that, you have field service management. That's a big chunk of it. So think plumbers, HVAC, electricians, et cetera. You know, folks that you know you call on, they come to your home, and they fix something, right? You've got pest control, you've got landscaping, remodeling, and then we have a decent-sized security and alarm business as well. So just across a lot of areas. And within those, our target customer, you know, we often say, is the S of the SMB.
You know, we're talking, single, you know, single person, you know, two to five trucks, maybe a little bit, you know, five to 10 trucks in some solutions. You know, and then, you know, ranging really all the way from, from people that are just starting out. You know, we have a couple solutions, that you can actually download on the App Store, and, and one is basically, you know, create an invoice and get paid, and, and the other is, you know, a, a more fulsome, bid, you know, sending out proposals, you know, time materials, selecting materials, throw your logo on it, look professional, get paid. So that's, that's the EverPro space. In EverHealth, you know, that is a, a fulsome, you know, practice management, and different add-on solutions.
But there, we're targeting, again, small, single physician, five physician, you know, one to two office type practices, not your big, you know, healthcare conglomerates. And then as you mentioned, in the wellness space, you know, we have salons, and we have two solutions in salons. One is targeted towards, you know, the lower end, kind of single salon, anywhere from, you know, one to a handful of stylists, to sort of the Aveda salon category with franchises. And then on the gym space, you know, we have, you know, some small studios, software that services them, and then some bigger box gym customers as well.
Great. So I assume in many cases, you're really just replacing pen and paper and an Excel spreadsheet.
Yeah.
But could you talk about the competition? I know it's gonna vary across your industries, but some of them may or may not be household names. But can you talk about who you compete against and who you're displacing-
Yeah
... across your verticals?
No, I mean, you're absolutely right on the pen and paper aspect. So I'll take it in sort of reverse order in terms of highest competition to less. So when you're in that gym space in the fitness space, yeah, there's I mean, there's some well-known names, Mindbody, ABC Financial, et cetera, that you do compete with, and that's more of a traditional RFP. You know, one of the press releases we put out a couple of years ago in that space was basically around winning the corporate mandate, and then you have to go sign up franchises essentially to get that business. That is the more competitive space.
Okay.
When you get to healthcare, next level down, I mean, physicians all have some kind of software, right? You have to with the electronic medical records requirement, et cetera. But in our space and where our customers live, you know, these are point solutions that are not connected and, in many cases, not best of breed. They had to take something when they had to basically stand up their practice. And what EverHealth, and increasingly with the consolidation efforts that we're going through, we talked about our earnings call, and I can go into more detail. We're creating sort of a down-market, full suite, one brand, fully integrated, mobile-first solution that there's not a lot of competition for that product in that customer set.
Yes, they'll all know about the Epic, Cerner, et cetera, Athenahealth, but they, you know, no one has this kind of fulsome integrated thing. So we're really excited about what we're putting forth in the market there. On EverPro, this is where you get to the pen and paper. I mean, you know, not to overuse a buzzword that has been well overused the last 10 years, but the digital transformation of the SMB is happening in real time. You know, all of us as consumers, you know, we are no longer accepting, you know, calling a plumber or an electrician and said: "Well, come on Tuesday," and they actually don't come till Thursday.
Yep.
They don't tell you when they're gonna come, and you don't know who's gonna come. When they're done, maybe they give you a slip of paper and want cash with a number on it, or you get a bill in the mail, and you have to go find your checkbook and write a check. Like, we don't wanna put up with that anymore. So both from consumer demand, and then many of these businesses are, you know, generational and passed down or sold, and you know, the new folks that are coming in, they don't want to run the business that way. So there is sort of a trend, you know, to that tailwind, and COVID certainly helped accelerate that a little bit.
So when we're, you know, competing there, I mean, yes, there's lots of point solutions. Yes, there's different, you know, competition, but largely speaking, you know, you're just competing against a, a large greenfield opportunity. With it, you know, we often talk about the total addressable market of EverPro because SMB is just a huge part of the economy. It's $1.3 trillion globally, is what we state. It's over $500 billion in the US. Within home field services, it's 60 billion in North America, right? So it is a big opportunity that we're just scratching at. And when you think about our scale and our size with 300,000 customers, and you ask about competition, we're the people don't know it because today we're going to market with lots of brands, which will be fixed over time.
Yeah.
But we are the gorilla in the space. I mean, there's no other company as large as us.
Yeah. Let's talk about some of the consolidation efforts that you alluded to and the changes you're making to your go-to-market.
Yeah, I mean, look, EverHealth is the best example of that. You know, 53 acquisitions, integration and consolidation is sort of becoming has been in our DNA for a long period of time. I mean, we've only been around seven years in this incarnation, but for some number of years, the consolidation effort was really focused on centers of excellence, corporate functions, so think HR, legal, IT, security, et cetera, but also our marketing and go-to-market engine. It's all centralized, but we had left a lot of the customer-facing stuff in individual solutions, so, you know, your product development, your customer care, et cetera. 53 acquisitions, sometimes more products than that, that's a lot.
And with that, you have a lot of, you know, cost opportunities going forward, because if you've got 53 acquisitions and 50-plus brands, you've got 50-plus websites, you may have multiple billing systems, et cetera, et cetera. And so there's a long-term effort at the company to keep consolidating that down, and I think, you know, and we'll get to financials, I'm sure.
Yeah
The margin expansion that we've been able to do this year is really helped by that consolidating activity. So when you get to EverHealth, we had on the earnings call a couple quarters ago, sort of a slide on this, and we talked about, you know, we're putting forth and starting to go to market with one EverHealth brand. We will formally launch that brand next year. What that means to the consumer is, you know, all of a sudden there's, you know, i nstead of buying DrChrono as your practice management and, you know, CollaborateMD and, you know, a bunch of other things, you're just buying EverHealth.
The platform.
The different solutions that were sold kind of bespoke or are cross-sold on top of that will just become features.
Yeah.
You know, check the box as you buy. And so we've organized EverHealth internally, with sort of one functional organization, one leader, one head of product development, one head of customer care, you know, one head of sales. And it, it's, you know, early, but been well-received by customers in the marketplace. And the consolidation efforts has, you know, basically generated real cost and scale efficiencies. So that's the model. You know, we will continue to do that in other places around the business as it makes sense.
Got it. So I have to ask the obligatory macro question-
Yeah
... especially considering, you know, the SMB exposure. You know, on one hand, as you alluded to, there are some tailwinds in place, and there's also a durability to certain businesses. For example, you know, your toilet breaks, the plumber's always going to have business.
Yeah.
But there's, you know, a discretionary aspect to it as well. So could you maybe touch on the macro and how it's impacting your businesses?
Yeah, of course, and we did, we talked about the macro a bit on this earnings call. Before I get to the impacts that we are seeing, I mean, let's just unpack it bottoms up in terms of, you know, where we don't see it, right?
Yeah.
Look, our SaaS business, right? Customers taking this software, you know, they're using this every day to run their business. This is the ERP for these small businesses, and so if you're in business, you're buying our software. And, you know, the average customer spends less than $2,000 a year on this software, so it's not an onerous expense. Then you get to sort of, you know, what the customers are doing with it, and particularly, I mean, healthcare, you can kind of compartmentalize and say that's, you know, less macro-impacted in general. You're really talking about the EverPro space. Within EverPro, you know, a decent chunk of that business is just break-fix.
Yeah.
It's, yeah, your toilet's leaking. You have a roof leak, you know, you have bugs in your house, et cetera. Like, all these things, like, you're going to get fixed. There's always an element, you know, of some kind of remodeling and big decisions on top of it.
Yeah
The bulk of it is going to be break-fix. Now, we did talk about on this earnings call some macro impacts that we are seeing in the business. And so for the last, you know, year, about a year, we've been talking about our marketing technology solutions business. And that marketing technology solutions is really two components: It's lead generation and digital agency, and it is a natural add-on sale that, you know, you know, besides payments, we hope will be a bigger part of the company going forward. But that's sort of more nice to have, not need to have. And so we have seen, you know, some decline in the growth rate in that MarTech business, and that has weighed on results.
More specifically, in the last quarter, you know, we came in just a hair under the midpoint of our guidance, and so we did give, you know, some more details to our customers or to our investors, sort of around, you know, what drove that.
Sure.
Particularly on macro, there was a level of sort of what we call consumer-driven demand, transactional business, some may call it more of a usage business, and we saw some minor impacts. One in our EverPro space, we have like a group buying membership solution that we've purchased, that it's basically a rebate program. We saw a decline in the volume of rebates, and that's essentially our customers buying equipment or materials to do their jobs.
Yeah.
And it's, you know, a combination of the price of those items going down and the volume of those items going down, and it's really consistent with what you're seeing from major retailers that reported this week. And then in the payment space, payments, payments is doing quite well. Its revenue is up 28% year-over-year. TPV is growing nicely. So we're very happy with payments, but we did start to see, just in a couple areas, in the salon space, a little bit lower number of transactions in some cases, so less people getting their hair cut. And then, in one solution within the home field services space, saw average ticket size ticked down slightly.
So just isolated, again, payments overall, 28% revenue growth, doing well, but we did start to see some little cracks.
Got it.
That, we fully baked into our updated guidance.
Got it. Okay, so with that said, I was gonna switch to financials.
Yep.
And just on a high level, and we could drill into the specific areas, as we move along, but could you talk about the overall revenue margin profile of the business, and how we should think about it getting back to that Rule of 40?
Yeah, I mean, so last quarter, we reported just over 10% year-over-year growth. I think the guidance- that we have out there now is for around 10% year-over-year growth, which is below our target of sort of mid-teens, right? That's, that's sort of where we want to operate the business. Just as a caveat before I go any further, when I'm talking about these stats, I'm talking about organic growth. Any additional M&A we do or have done, we kind of take out of-
Yeah
... out of our growth rates. So when you think about that, you've got the MarTech impact that I just spoke about.
How big is that? I'm sorry, how big is that business?
MarTech's about 20% of revenue.
Okay, just the levels. Thank you.
Lower gross margin, so less EBITDA impact. But if you take MarTech out, and you take fitness out, which is a smaller component, but has been a drag post-COVID, we're at 13% growth. And so that, you know, it's not a lot to say that I can get to that mid-teens rate that we were hoping for, and certainly in a better macro environment, we would expect to be there. When you look at the margin profile of the business, this is one thing that, you know, we talk about the consolidation activities and the efficiencies, this is something that we're really proud of because we entered this year, you know, and we talked about this on our when we gave guidance last winter, you know, with the notion of, okay, we're gonna actively manage costs.
We're going to look at consolidations. We're going to, I think we used the phrase, "have our hands on the steering wheel," as we navigate, you know, what could be a murky year, and we've done just that.
Yeah.
And so as we look at sort of the latest guide, it's, you know, 300 basis points of margin expansion for the year versus last year. So, you know, exiting or for the full year, looking at 22%, we were at 24% this last quarter that we just reported. And, you know, on the IPO, which was just only two years ago, you know, we talked about 25% to 30%, even to margins as being a medium-term target. But when I was talking to folks last year, and we were, you know, looking at 19% for the year, that seemed far away.
Yeah.
Now, at 22%, it seems really close.
Right.
And so the combination of that margin profile and sort of what we're seeing in the core SaaS, and certainly with the payments growth on top of it, you know, we don't think we're that far away from consistently being able to, it's not about hitting Rule of 40.
Yeah
It's about building a business that consistently can be at Rule of 40.
Right. So, I mean, there, there's a few different ways to slice and dice the revenue and EBITDA pie, but if we were to, just to drill into payments a little bit, could you talk about how much of a contributor payments is, as well as how penetrated you are within your existing base, and, you know, just the opportunity there in general?
Yeah, no, I mean, payments is, if Mark was here, and he apologizes he couldn't make it, he would tell you that payment, accelerating payments adoption is literally the most accretive thing we can do with the company, and that's- sort of our mantra. So, payments for us is just over 17% of revenue today. And we book it on a net basis. and so with that comes 95% gross margins. And then if you look at penetration, we're approximately 11 %+ penetrated of our existing base of customers that are actively utilizing payments. We also talk about customers that are enabled for payments, because those of you in fintech know, actually getting people signed up is the first step.
Yep
T hen getting them to use it is the second step. And that is, you know, basically double the penetration rate there. But certainly a large opportunity. And so if we think about sort of our model, and you're modeling it out, and, you know, back to being accretive, if you've got 11%+ penetration of utilization, that revenue is growing at 28%, and you've got 95% gross margins, that really just falls to the bottom line on incremental, that's a really good motion. That's gonna help us, you know, get to those margin targets that we want to get to.
If we think about the various business lines, where are you more penetrated, and where are you less penetrated, and where do you see the opportunity?
You know, it's healthcare, well, penetration and then total value, I mean, a little bit different. In healthcare, probably, you know, less of an opportunity just because you've got insurance and everything else-
Yeah
... so you can take co-pays and some co-insurance and some ancillary stuff for, some areas of the business. But, but that's gonna be sort of a lesser opportunity overall. Still important, but, but lesser opportunity. It's really the home field services space, where you've just got a massive opportunity.
Yep
Like we talked about just a moment ago, being greenfield, being paper and pen, it's also cash. And so there, you're not talking about, you know, just having to get payments from someone else. It's just changing our customer's business such that they can accept digital payments, and they get real value out of that. So that is just a big opportunity.
Got it. That's, that's super helpful. Let's switch gears to capital allocation. As you mentioned, M&A has always been a huge part of the strategy. You know, obviously, the rate environment has changed. You also recently increased your buyback authorization, so we could certainly talk about that. But, could you maybe touch on your capital allocation priorities, and how investors should think about just your go-forward M&A strategy?
Yeah. I mean, so we view capital allocation as a point-in-time decision. So we're always going to be allocating capital to the thing that makes the most sense and is most accretive at the time, and that could be buybacks, that could be debt paydown, that could be future M&A, that could be organic investment into the business. When you think about M&A, kind of looking backwards, you know, the reason it was such an important part of the story was you had this payments engine, this platform, new business plan, and to accelerate, you know, getting to where we want to go and basically have timescale relevance, if we decided to build, you know, 50+ different pieces of software from scratch.
Right
We wouldn't be here right now. And so, that was an important part of accelerating it. As we sit here today, you know, we think about M&A in terms of, you know, where can it be strategically, operationally, and financially accretive? And really picking and choosing. You know, we believe we're good at M&A. We think we've kind of cracked the sauce or found the secret sauce in terms of our business. And we will continue to pursue M&A over time, but it's gonna be selective.
Yeah.
So if you look at last quarter, we just announced a pretty small acquisition, Kickserv, in the home field services space. And even though, you know, like, there's still a discrepancy between public and private multiples, and you have to, you know, look out a year in terms of our, you know, synergies we can realize in terms of both top line and bottom line, to have it be accretive, we did that deal because it was super strategic.
Right.
And so when we think about in our EverPro space, and as we are consolidating sort of our go-to-market and our view of the customer, we had those entry-level solutions that I talked about, Joist being kind of the second level up in terms of, you know, customer sophistication. There, you've got customers that are just sending proposals out there, just sending bids, just kind of starting their business. And then, the next solution we had was Service Fusion, right?
Which, if you've seen it on the web or a demo, it's a full-fledged, you know, multi-truck, fleet tracking, full inventory, you know, web-based with a, with a mobile client product, but the person that graduates from using Joist wasn't able to go right there.
Right.
So, you know, we saw that customers could be, you know, that their, their right path may be to go somewhere else. We could have built a Service Fusion Lite. We could have, you know, it may have taken a couple of years to kind of fill that gap. Instead, it made more sense to buy it, own it today.
Yeah.
There are areas like that, where it makes perfect strategic sense to do M&A. When you think about our buyback, I mean, you know, the board's view is the stock is undervalued.
You know, it makes all the sense in the world to be buying back our shares. We have the ability to do that because, you know, with our margin profile, we're also generating significant free cash flow. So I think on an LTM basis, it's $105-ish million of adjusted unlevered free cash flow, $75 million of levered free cash flow. I mean, it's a significant amount of cash. So we upped the buyback to extend through the end of next year and added $50 million onto our authorization.
Got it. That's, that's great. You touched on public-private valuations, and that's, you know, it's been a topic of conversation thus far at the conference. You know, you, you operate in some niche markets. Some of your targets might be on the smaller side, and not reflective of what we hear and see in the news, but could you talk about what you're seeing from a valuation standpoint? And also, you know, if we think about the type of solution you might be buying, perhaps in the software space, d o you see opportunity to attach payments to some of those deals?
Yep
... as a driver of ROI?
No, absolutely. Look, valuations, there's still a discrepancy between sort of public and private. And yeah, our historic- I mean, the largest deal we ever did was DrChrono two years ago.
Yep.
It was a $180 million deal. Most of the deals we've done have been in the tens, you know, tens of millions, not hundreds of millions. And so, you know, there you've got a lot of, you know, middle-market, you know, PE firms, going after these smaller software entities. And to date, you know, they haven't been squeezed on capital to a point where valuations have come down, and expectations of the sellers have not come down. So we still have that dynamic persists, certainly has colored how we've been a little bit slower on the M&A front over the last couple of years. I forgot your second part of your question.
Attaching payments to.
Yeah, so attaching payments, yes. No, absolutely, I mean, that is, that is the thesis. In fact, when you look at Kickserv, you know, we look at, okay, a couple things. One, most of the solutions that we've acquired are, are subscale in their operations.
Yep.
They don't. You know, we have a 100+ person central marketing team, you know, that's doing a lot of digital acquisition, you know, search engine optimization, et cetera, to basically digitally acquire these customers. If you're a small operation, you're not doing that, right? Maybe you are a little bit, probably a lot of word-of-mouth, probably a lot of happenstance that you acquire customers. And so there's certainly the ability for us to accelerate customer acquisition as we buy these. But oftentimes, payments is the bigger opportunity. They may have a payments integration. It's probably not as good as ours-
Yep.
And it's certainly not as attractive from a take rate perspective as ours. And so, you know, if there's no payments capability embedded in the software, we'll add it. That's part of the thesis. If there's a less optimal payments integration, we'll start putting all new customers on our integration and sort of fix the workflows. Those customers that are on legacy, we'll probably try to renegotiate those deals, given our buying power, and get better take rate.
Speaking of take rate, is that something you've disclosed, or could you talk about that?
Yeah, we don't report it regularly, but we've certainly talked about it publicly. It's just over 90 basis points-
Got it
... right now. You know, there's legacy back book, some legacy PaySimple stuff, and some legacy implementations require solutions that are lower, and some of the newer stuff is higher, and there continues to be room to see that-
Yeah
... that expand.
I would imagine, you know, a lot of your, at least in the EverPro space, a lot of your customers, especially the older ones, are prospective customers, are just used to taking check. Are you seeing a greater openness to accepting digital payments?
Yeah, I can touch on some other facts real quick. You know, we talk about sort of that utilization in the 11% to 12% range, and a lot of investors I've talked to this week have asked, "Well, how do you accelerate that?
Yeah.
Right? And we have a couple programs, some trials, whatever, but one of the things that we trialed this year that we'll probably do a little bit more of next year is using just a couple, you know, handful of like inside, I'll say inside sales reps, but you know, think of people just outbound dialing to existing customers and explaining to them what it could mean for their business.
Yep
If they take digital payments, because it is meaningful. And that program was quite successful as a trial. And so I think when you look at EverPro, to your question, it's really about educating the customer on how this can transform their life and how simple it can make it-
Yep
... if they accept digital payments.
Great. Do we have any questions in the audience?
Yeah, can you talk about your sales force? You referred to that a couple of times. I'm new to the story. Is this feet on the street, so to speak?
No, it-
Do you work for the kind of, are they contracted? How does it work?
No, it's. And if I use the word sales, I was maybe extending the definition a little bit. I mean, 80% of our customers are digitally acquired, and so when you think about the SMB and the size of these customers, if we had a large sales force that was out calling on folks, we wouldn't have the margins that we have, right? Like, we have to be efficient in customer acquisition, given the profile of our customer. So 80% digitally acquired. The balance, you know, when you get into the EverPro space and EverHealth space, you're gonna have some trade shows, and some. You know, look, we have, like, a ladder of solutions in terms of customer sizes. You get to the top end in each vertical, there you might have actual salespeople.
You might have some feet on the street, like in our security alarm business. There's some portion of that that looks more enterprise-like in the gym space, like we talked about. But the large proportion is the digital acquisition. On top of that, a large percentage of our customers are self-service, right? Like, we have to make the software simple, and that's sort of another piece of the secret sauce, right? Like, you know, you could say, "Well, you know, Salesforce is a great platform. Why don't your customers use Salesforce?" Well, our customers are not buying Salesforce.com, right? They need simple, mobile first. They need software that has the workflows dedicated to their business, and knowing exactly what they need.
So we're able to do that, and we're able to do that in a way with, you know, self-onboarding, in-app help, kind of low-touch customer care wherever we can.
Got it. Any other questions?
Customer care, what does that look like for you?
It's right now, it's with the exception of our health, it is kind of disparate. You know, it's typical call center, or online help, et cetera. Hopefully, in the future, more kind of AI-driven efficiencies can be had there as well.
That's in-house right now?
Yes.
Got it. Any closing remarks?
Can I ask one more?
Oh, sure. Of course.
[inaudible] How would you leverage up the balance sheet with for the right evidence?
Yeah, I mean, you know, I think we were kind of in the 3 to 4x range, certainly come down with the EBITDA growth. I think that's a comfortable range to be in. We do, you know, we were a PE-backed company. We still have large PE owners. We believe in levered returns and the equity upside that provides our investors.
So we do operate in that, and I think when you think about levering up, I mean, obviously, you gotta think about the rating agencies and everything else, but levering up for a deal that you can, you know, within a line of sight of, you know, 12-18 months, you know, with growth and with synergies, you can get back down to where you were, that's sort of how we think about it.
[inaudible] So you felt we could go to 5x?
I'm not gonna say yes or no, but certainly, you know, if for the right opportunity and massive synergies, like, yeah, we would certainly look at things. That may be a little high, to be honest, but certainly are comfortable in that 3 to 4x range.
You said that, you know, the payment penetration is in that 11%, and you're going to try to convert the back book right now. Just on the new logo side, are you seeing any changes in the attach rate upfront when a new customer comes on board? And if there's any strategy you can do to increase that?
Yeah, no, I mean, there's lots of strategies. Certainly, that is a big part of our motion, is trying to basically. It's much easier to get them to take payments when they're new customers, as opposed to going to the back book. You know, with 700,000 customers and only 11% penetrated, we do talk a lot about that back book. And we certainly have used a number of tools, such as price incentives, et cetera, to promote that. But on new customers, yeah, it's certainly a lot easier.
Great. Well, I think that's all the time we have for today. So thanks again for joining us. And, Brad, I appreciate you joining us today. Thank you.
Good. Thank you.