Q3 2019 Earnings Call
Session and instructions will follow at that time, if anyone should do court systems given conference. Please press the star zero on your touched it and telephone as a reminder, this comp in school is being recorded.
Now I'd like to trying to calling for somebody to host Mr., Patrick basically our Chief Financial Officer. Please go ahead.
Good afternoon, and welcome to Everbridge its earnings conference call for the third quarter of 2019. This is Patrick brick week, Senior Vice President and Chief Financial Officer of Everbridge with me on the call today, our Jamie Ellertson Executive Chairman and David Meredith CEO .
After the market close today, we issued a press release with details regarding our third quarter results, which can be accessed on the investor Relations section of our website at <unk> Everbridge Dot Com. This call is being recorded and a replay will be available on our IR website. Following the conclusion of the call. During today's call. We will make statements related to our business that may be considered.
Forward looking under federal Securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date, we disclaim any obligation to update any forward looking statements for outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized.
In the press release that we issued today.
For a further discussion of the material risks and other important factors that could affect our actual results. Please refer to our filings with the FCC, including our recent 10-Q in 10-K filings.
Also during the course of today's call, we will refer to certain non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in our press release.
Finally at times in our prepared comments responses to your questions. We may offer metrics that are incremental to where usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in future.
With that.
Let me turn the call over to Jamie and David for their prepared remarks.
Thanks, Patrick and thanks to all of those joining our Q3 2019 earnings call today [laughter] with David measured at the helm as CEO for nearly all of the third quarter I'll keep my remarks, shortening focused on our longer term strategy and that they would get into the details of the quarter, but first I'd like to say that the.
Board is very pleased with the way that our executive transitions go on this year, David joined US as our new CEO only four months ago and has been very actively engage with customers employees and investors and in my view has positively impacted all of our key stakeholders.
Q3 results exceeded the high end of our guidance ranges I guess.
With growth of 35% over last year and subs them, a proven and our adjusted EBITDA results.
Our strategy to invest in growth by capturing a significant share of the multibillion dollar opportunities in critical that management and population warning is validated by our strong results this past quarter, while simultaneously improving our operating execution to deliver increased profitability from our overall business.
And we're excited that we are again, raising our expectations for both revenue and profitability for the full year, that's Patrick will detail in a few moments.
During the third quarter, our core business, specifically your Massification business delivered record results while in parallel we continue to experience increasing demand for both our critical that management or C.M. suite in North America, and our population warning solution in the international markets.
We saw a notable deals and all of our core target markets corporate government that health care as well in our leading international geographies in North America, the signing of the state of California, The largest state wide deal in our company's history provided a proof point for the potential we see in our evolving strategy to lever indirect channel.
Sales to access increasingly larger overall contracts as well as an indicator of the robust opportunity, which remains in our state local and federal government marketplaces.
And as in the second quarter, we witnessed continued strong customer poll for our C.M. solutions with nine new CRM customers added including early adopters.
Adoption by customers outside our target corporate market in North America.
This is a positive trend ahead of our rollout of C E M.
Into the international and government markets, which we expect to launch next year.
Looking ahead, we continue to execute our game plan to win new customers and expand our existing relationships by offering additional applications.
From our platform to the marketplace.
Our recent purchase. So then C is another great example of how we support the strategy completed the very end of Q3 and see for has combined with our current risk and threat data solutions to form the market leading solution that enables organizations to monitor and understand how threat events globally may impact those things.
The most important to their success there people their operations or there other assets.
And as David will detail, we get off I got off to a great start with numerous cross sales of the M.C. for solution into our base in Q3 finally with the recent announcement of new countrywide alerting wins as well as even the even larger European Union opportunities that will begin next year.
Believe we can safely say that our strategic purchase and development of population warning has put us into a very strong position to continue growing our global business at an exciting paces, we look at.
I'll now pass the call over to David Maris, our CEO for more details on our performance in the third quarter.
Thank you Jamie.
This is an exciting time in Everbridge this past quarter. Our team continued to rack up an impressive list of achievements and milestones as well as advance our market leadership and product portfolio to enable us to continue to scale the business in the years ahead.
As Jimmy indicated we beat our financial guidance for the third quarter continuing the track record we've achieved every quarter since our IPO over three years ago.
Revenue was $52.5 million, representing growth of 35%, including contribution from our NC for acquisition.
And these strong topline results in the third quarter translated into profitability that enabled us to beat our bottom line guidance with adjusted EBITDA coming in at $1.6 million in the quarter.
Our growth continues to be driven by attracting new customers and the Underpenetrated multibillion dollar C.E.M. market and the very early stage international population morning space, while in parallel broadening relationships with our existing customers for our core solutions in the corporate government and health care markets.
And our customer base of over 4800 enterprise organizations around the globe continues to renew at market leading rates, enabling our teams to cross sell and establish more multi product relationships all continuing to drive an increased average sales price.
My goal is to continue to focus on the strategies that have made everbridge successful to date, while enhancing and extending our go to market efforts in order to continue driving high revenue growth and positive cash flows for years to come.
Now allow me to turn to some key financial metrics for the recent quarter.
Our team delivered strong results exceeding all of our key financial and business metrics in third quarter, including adding 184 net new enterprise customers in Q3, which is above the high end of our historical range after including more than 30, net new customers added through NC for ending the quarter with fourth.
Sales and 851 enterprise customers.
In Q3, we close the largest solution contract in our company's history.
And our most strategic markets cm, we added nine new customers in Q3 up from eight in Q2.
During Q3, we signed 29 deals valued at over $100000 per year and added several million dollars relationships to our customer roles.
The strong multi product and C.M. wins drove our average selling price over the trailing four quarters to $75000 in the third quarter up 36% from $55000 one year ago.
Contributing to this growth in ASP, where the 112 multi product deals we signed in Q3, a record quarterly level compared to 107 a year ago.
And to give you a sense of how our new products are contributing to our overall growth 51% of all our new and gross sales were derived from new products in Q3 compared to 50% a year ago.
Our international business continues to grow at a very healthy pace now representing 20% of total revenue.
Our revenue mix was fairly consistent in Q3 at 55% corporate 33% for local state and federal government and 12% for health care as we continue to see growth from all of our vertical markets.
Well these metrics all represent continued progress in driving our growth we want to remind you that these quarterly metrics can fluctuate, but as you can see the long term trends continued to be very favorable.
Over the past three years, our growth has been driven by both new customers as well as the introduction of new products and the cross sale into our large enterprise space.
Q3 demonstrated the health of all of our key markets from strong results for our core mass notification solution to record results for newer products like visual command Center safety connection resin in connection and I tailoring solutions as well as are most strategic solutions suites critical that management and population a learning.
Turning to our success across our key verticals, let me begin with the corporate space in the third quarter, one of the world's largest car rental companies became a new everbridge customer selecting RCM and I T learning solutions as a backbone to their new global Security operations Center that will you see m. and safety connection to reach loan workers outside.
Side of airport locations, and I T alerting to respond to and resolve incidence and outages impacting their operations.
Another new corporate customer who selected CRM in the quarter is one of the largest insurance providers in the U.S. This insurer chose CEO to support their global security and business continuity programs as an existing NC for customer. They saw the power of the combined Everbridge and NC for solutions to create a comprehensive situational awareness.
And operational response offering from a single pane of glass.
And another of our focus markets transportation, we closed the six figure Multiproduct deal with another of the top 10 U.S. Airlines. This airline chose CEO , Jim I T alerting and our new crisis management solution to identify and manage risks to flight operations passenger experience and brand and a close to seven figure deal.
Additional notable corporate wins in the quarter include a significant opportunity to drive our network effect with the signing of one of the largest not for profit organizations focused on managing the threats that can impact specific religious communities in the U.S. from synagogue community centers. This umbrella organization chose our CFO .
Solution, including BCC mass notification and risk intelligence to help them better identify and managed potential risks in their communities.
Additionally, this new organization also May act as a channel for additional sales to the many organizations that this nonprofits serves.
Numerous other well known corporates also became new everbridge customers in the third quarter across multiple markets, including one of the largest home furnishing retailers one of the largest global chocolate tiers, one of the nations largest public utilities, a global payment technology leader as well as a multinational software company who chose b.
Cc and mass notification and a six figure deals through our channel partner International SLS.
On the expansion front, we continued to see strong cross selling activities as we drove key wins from our large installed base such as a new cm deal from the provider of one of the world's largest messaging apps to extended their mass notification deployment to become a full cm customer in order to more efficiently and effectively managed critical events on a global.
Will scale.
Other noteworthy cross sales expansion deals include one of the world's largest data storage companies, who added VCC to their existing mass notification and safety connection deployment, enabling RCM suite to enhance their ability to identify events impacting their people assets and supply chain as well as a leading management consultancy that significant.
Only expanded their use of safety connection to support their efforts and locating and protecting tens of thousands of employee contacts around the globe, including their large number of traveling consultants and remote workers.
Turning now to our efforts in the government markets, we had an equally exciting quarter with significant state deals and ramping activity with us federal customers.
New federal government contracts in the quarter included organizations choosing our safety connection solution at the U.S. office of housing in urban urban development or HUD.
The National Labor Relations Board and the U.S.U.S. pension guarantee Corporation.
We also signed our first federal government cm customer in the third quarter. The U.S. Department of Labor, which added VCC to their deployment of Everbridge to equip the department of Labor's Operation Center in Washington, with the ability to protect their employees as well as hundreds of physical office locations nationwide.
This win further reinforces our confidence in the potential for C. M beyond the corporate and health care markets as we experienced market pull into our additional historically strong verticals that we have yet to formally launch RCM suite into efforts we plan to begin in earnest next year.
And the U.S. postal service expanded their relationship with Everbridge and the third quarter, adding IP alerting to their existing deployment of Everbridge solutions and all Q3 represented one of our most successful quarters for the signing up new federal logos.
Now turning from our federal success allow me to spend a few moments on our very strong showing in the state and local government segment during Q3.
For example, our network effect in the state of Florida continues to expand our relationships I think.
Ross and Upselling with examples like the Florida Division of emergency management, selecting our new resonant connection offering a total deal value of almost half a million dollars and perhaps more interestingly a government deal that closed in under 30 days.
Resident connection the second new product added to our platform in the last 18 months provides verified mobile landline and voice over IP telephone contact information for use by public safety organizations to dramatically increase the communications coverage of affected people that need to be notified during a significant event to.
Ensure that the right people get the right message at the right time.
In fact, our new resident connection solution also drove growth deals and other state and local government customers, such as Jefferson parish, Louisiana, and Santa Barbara County, California.
From a new business perspective, our state and local government team was also very busy in Q3 closing new deals with organizations like the state of Texas, where we will help protect the state capital complex, Hawaii County, and Virginia State parks to name, but a few.
And of course as was previously announced our Q3 when with the California Office of Emergency services is particularly noteworthy. This multimillion dollar when represents the largest state deal to date and is in fact, the largest deal that we've closed in our history period.
Given the success, we've had with our network effect in the state of Florida, which has led to a multiple of original contract value throughout the state, we're particularly excited about the additional opportunities our California, when could drive, especially considering the California has nearly twice the population of Florida.
This transaction is also particularly important in that Everbridge was partnered with access public safety to win this bid to provide world class emergency alerts to California 38 million residents in first responders.
Speaking of California, I want to take just a few seconds to recognize the tireless efforts of the first responders working in California, right now to suppress the numerous life threatening fires ravaging different parts of the state again this year.
We hope that are statewide implementation will enable public safety officials to better communicate and manage these inevitable tragic events in the years ahead.
With an increasing number of wildfires each year, we believe our mission at Everbridge, providing the best technology and people focus on peak keeping people safe and businesses running is more relevant and important than ever before.
We have worked strategically with OEM partners, such as international left to us for a long time, but we believe this new California win with our partner Aptose Public safety is a strong example of the type of opportunity than a more active partner channel can deliver while we are still in the early days of exploring the potential of these relationships the scope and scale of our.
State of California, when suggests that the opportunity could be very significant even after considering that with Florida and New York, We've already one statewide deals with three of the four largest states in the us not to mention our Connecticut in Vermont wins.
Our strong results in Q3 were also illustrated in the healthcare market, where we closed another cm deal Molina healthcare one of the largest managed care companies based in California added VCC and safety connection in the third quarter to become our second cm customer in health care.
We also closed our largest IP alerting deal ever with healthcare Service Corporation, a leading multi state healthcare insurance provider, having outgrown their internally built on call solution. This existing customer turned to everbridge due to our commitment to customer success as well as our leading capabilities.
Additionally, our health care team closed new customers, such as Bluecross Blueshield in Massachusetts essential health in Minnesota Metro Health in Ohio Rush University Medical Center in Chicago, and the Wilmington, Virginia Medical Center in Virginia to name, but a few of the teams successes in Q3.
Looking at our business internationally, we recently completed the implementation of our country wide public warning deployment in Iceland, which is now live and operational.
In light of the recent EU mandate, requiring member countries to have a population wide alerting system in place by June 2022. It's notable that Everbridge is now the first population alerting provider to support for European countries, Greece, Iceland, the Netherlands in Sweden.
Q3 also illustrates the breadth of our international success with key deals closed across the globe for all of our key product areas, including one of the largest international banks, which purchased three new solutions, including Ita and our new crisis management solution in a multiproduct deal that made them a $1 million per year customer.
As well as an expansion of our public warning solution for the country of Greece.
Multiple other geographies contributed including a new and then deal with a leading media company in the UK, New Ita deal with one of the leading online brokers in Germany, Our first manufacturing win in Mexico in Mexico, which was a mass notification deal covering 5000 employees and a large six figure deals for when our France's largest banks.
Now I would like to turn to a few operational comments.
On the last day of the third quarter, we completed all the components of our NC for acquisition to significantly enhance our risk data collection and analysis capabilities, Patrick will get into the financial details, but we're excited about the performance of NC for business segments that were completed earlier in the third quarter, which exceeded our expectations.
This early success serves as another proof point that we are executing the right strategy to extend our leadership as a platform provider for critical event management to the corporate government healthcare markets. The combination of our pre existing critical then data sources in combination with empty force industry, leading analysts curated global risk and threat data.
Positions us as the clear market leader.
Our data offering enables the world's largest organizations to understand what risk and threats exists globally that can or will affect the things. They care about most to enable them to protect their people assets supply chains and operations all through our common operating environment called CEO Jim.
Early customer reactions to the business combination had been very positive with one customer publicly stating that everbridge plus NP four is and I quote a game changer for proactively mitigating the impact of critical threats around the world.
NC for was instrumental in a number of new Everbridge wins in Q3, including pharmaceutical healthcare and online gaming businesses that selected our risk intelligence capabilities.
In my introduction I mentioned that my goal is to continue executing the strategy that has worked so well for everbridge well also looking for opportunities to further extend and broaden our reach.
I believe that channel partnerships, including indirect sales and subcontracting can be one such contribution to our go to market efforts as we look ahead clearly our statewide win in California with after US public safety is a strong example of this.
To that end I'm very pleased that we had a smooth transition to our new chief revenue officer burn in urban which supported our strong execution in the quarter.
Burning is focused on continuing to drive our move upmarket into the C suite at Fortune 1000 companies, helping us penetrate international carriers, and countrywide deals and expanding our routes to market through indirect partners like access.
In summary, I am excited that during my first full quarter as CEO . We again delivered results that exceeded our guidance ranges. We had a wide variety of notable wins from the state of California, which is the largest deal in our history to our largest IP alerting when our continued strong cm traction with a record nine new customers and our scaling into.
National business that is expanding in multiple geographies and across all of our key products and solutions.
As we continue to broaden and deepen our product portfolio expand our sales reach and build on our winning strategies I am confident that we'll continue to deliver strong results.
Now I'll turn the call over to Patrick for more details on our financial performance and to update our guidance Patrick.
Thanks, David allow me to first review the financial highlights from our third quarter, and then I will turn to our guidance for the fourth quarter and the full year revenue in third quarter was $52.5 million, an increase of 35% from year ago and above the high end of our guidance range. These results included a better than expected contribution of approximately $2 million from our acquisition of NCR.
Sure well, we're primarily focused on driving topline growth, we continue to be mindful of our costs as we make positive progress on our bottom line as such our revenue over performance helped produce adjusted EBITDA of $1.6 million, which was also above the top end of our guidance range.
Strong retention is the foundation of our growth and our dollar based net retention rate remains consistently above 110% as we continue to provide significant value to our existing customers of course, new customers contribute to our strong growth and in the third quarter. We added 184, net new enterprise customers, who generate fees of $200 per month or more.
Our ending the quarter with 4851 enterprise customers.
Looking at the details of our piano unless otherwise indicated I will be discussing income statement metrics on a non-GAAP basis.
A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release, we issued earlier today.
Gross margin was 70.9% up from 70.2% a year ago as always keep in mind that gross margins may fluctuate from quarter to quarter and should not be considered indicative of any trends.
Total operating expenses in the quarter were $37.9 million, an increase of 30% from year ago, reflecting the combination of continued product and head count investments and the incremental expenses of acquired businesses. Adjusted EBITDA was above guidance at $1.6 million compared to zero point $2 million in the year ago period.
Net loss in the third quarter was negative $1.5 million or negative four cents per basic share, which was also better than our guidance and that improvement from a year ago net loss of negative $3.1 million or negative 10 cents per share.
On a GAAP basis, our net loss was negative $12.9 million also better than our guidance range.
Turning to our balance sheet, we ended the quarter with $199.1 million in cash cash equivalents restricted cash and short term investments compared to $241.8 million at the end of the second quarter.
Primarily due to cash used to complete our acquisition of NC fourth the ended the quarter.
Total deferred revenue was $116.4 million at the end of the quarter, an increase of 31% from year ago. As we have noted on almost every one of our public earnings calls our deferred revenue balance at the end of any given quarter can vary due to a number of factors, including the timing of significant new contracts as such.
Deferred revenue is not always a meaningful indicator of the underlying momentum in our business from a quarterly perspective, though we believe its upward trajectory is directionally relevant on a longer term basis.
On the last day of the quarter, we completed the final elements of our NC for acquisition total consideration was $84.5 million made up of $51.7 million and cash in approximately 321000 shares of our common stock.
Now that we've closed the acquisition of NC for and are well down the path of Rightsizing and integrating that business, we're updating our expectations for the revenue contribution from NC for this year to be approximately $4.5 million.
While we will provide detailed guidance on 2020 in our fourth quarter call for modeling purposes, we would estimate or revenue contribution of approximately 10 $12 million frenzy for next year. After considering the purchase accounting impact on acquired deferred revenue as well as the impact of Rightsizing in integrating the business. We continue to expect NC for will be up.
Accretive to non-GAAP financial results within 12 months.
Now, let me turn to our outlook for the fourth quarter in the year, given our better than expected third quarter performance and continued momentum entering the fourth quarter, we are increasing our full year outlook.
For the fourth quarter, we anticipate revenue of between 56.1 and $56.4 million representing growth of 34% to 35%.
We anticipate positive adjusted EBITDA between 4.9 and $5.2 million. This level of positive adjusted EBITDA illustrates our overall commitment to a balanced approach of mid Thirtys revenue growth comprised of organic and M&A activities mirrored by a thoughtful execution towards improved profitability.
We anticipate non-GAAP net income of between 1.3 in $1.6 million or income of between four and five cents per share based on 34 million basic weighted average shares outstanding.
Stock based compensation expense is expected to be approximately $11.1 million for the fourth quarter.
For the full year, we're increasing our revenue guidance to a range of $199.9 million to $200.2 million representing growth of 36% based on our strong third quarter performance continued momentum and contribution from and C. From a profitability perspective, we are increasing our adjusted EBITDA guidance to a range of 5.0 to 5.3 million.
Dollars, a nearly 8 million dollar improvement from 2018, we now expect the non-GAAP net loss of between negative 7.3, and negative $7.0 million for the full year 2019 or between negative 22, and negative 21 cents per share based on 33 million basic weighted average shares outstanding.
This guidance assumes estimated stock based compensation expenses of approximately $35.2 million for the year.
In summary, we are pleased to again deliver a financial performance that exceeded our guidance ranges and we believe we are entering the fourth quarter with strong business momentum across the board.
We are optimistic that this momentum will carry through the quarter and that we will enter 2020 from a position of strength as we further extend our leadership in the multibillion dollar market for critical that management now operator, we'd like to turn the call for questions.
Sure, Sir ladies and gentlemen, if you want to ask a question. Please press star one on your telephone keypad. If your question has been answered you wish to remove yourself from the Q Chris.
Again.
I wanted to ask questions.
Our first question comes from two line, Brad Zelnick with credit Suisse. Your line.
Thanks inside of an entre Brad congrats on a good quarter guys. David I just wanted to dive into some of your recent success in state in country wins on the factors driving your success here. He has the competitive landscape changed at all for these kind of contracts.
Thanks, Bob It's a great question, we're very bullish about the prospects in this space. When you look at the total addressable market as much success. We've had there's still a lot of states and a lot of countries out there for us to go in when we.
We do think.
I've been talking about it since I've joined that we want to have more routes to market. We don't want to be just reliant on a direct sales strategy. We want to have direct sales would have indirect channel partners that will help us and that is particularly important re doing very large deals at the country level or the state level, where it may be bundled then with other types of business and a much larger contract where you are.
Really have to go with partners large system integrators companies like Aptose that we partnered with two in the California deal. So I think the strategy of having multiple routes to market is going to better position us for more of these big deals at the country wide level, you see more regulation and standard. So the EU is mandating that the EU countries have to put these types of.
Solutions in place if you go to India, you'll see that coastal states that require now because the cycle loans and so you're just seeing more and more momentum there and we have an opportunity because were.
One of the early companies that have scale with four countries up and operational in Europe . No. One else has that multiple states in India operational now we're adding other other countries I.
I think we're well positioned a lot of people want to come and find out how we've been doing it how did we did the implementations what can they learn from us. So I think it puts us in a position as thought leader and a trusted advisor to help these other countries in states figure out how to move forward.
Thanks, that's helpful any kind of answer so my follow up but can you just elaborate on the plant a leverage more of the Shandell, how do you kind of see the relationship between direct and indirect.
Going forward and how much can be driven by the channel long term.
Yes, it's a great question, so theres different types of partnerships I think historically, we've had good success as the OEM model with international Esso Us.
We think theres potential to work with large system integrators on a global basis for some of these big particularly state local countrywide deals.
So we're reaching out having discussions and I think a lot of people have taken notice on the California deal.
And approaching us wanting to work with us. So I don't think we have more news to report on that now but.
We feel good about the ability to.
Move forward and develop more of those partnerships and make them effective and also you might notice that we added burn in urban as our Chief revenue Officer. This quarter I think burn it's got a lot of good experience understands how to do this and is already making an impact there.
Thanks again guys.
Thank you.
Our next question comes from Sterling Auty JP Morgan.
Good.
Yes, Thanks, Hi, guys, let's follow on that last thought there David in terms of burden.
And can you maybe highlight any changes to either people process or other items that he's already effectuated SUNS coming on board.
Yes, thanks, Thanks Sterling so.
Syncthree areas of focus in terms of things, we want to emphasize more going forward. One is the whole channel piece and we are bringing on some additional expertise around that and getting that ramped up.
Second one is really continuing the enterprise sales transition that Jamie has been talking about for the past several quarters, which.
Pass leadership has been evolving and so with that we want to move.
Continue to move up market.
With the fortune 1000 and into the C suite.
And then also when you talk about the country wide deals.
When the country, but then you also going when the carriers in that country and so vernon's got good experience and good global network and relationships around the carrier space, which is going to be helpful to us as we do these big country wide deals.
Perfect and then one follow up Patrick view last quarter I think there was the overreaction.
The one side on billings and.
He'd your comment around deferred revenue, but just to kind of good out there in front of it for this quarter the big upside at least relative to what we're thinking on both deferred revenue and billings any commentary. They can give in terms of maybe what portion of that just came from invoicing things that didnt get invoice last quarter versus the strength of bookings.
In the quarter.
Yes, Thanks, Sterling first don't overreact.
I will repeat that mantra and look we had a great quarter.
We continue to site Lumpiness and those figures.
There.
Particular in this one we.
We've signed a large deal.
With.
With the channel partner, we've we still have the large countrywide deals that we've signed recently and some of these things.
Hit that metric in some of them don't so there'll be more to come as we as we go.
Quarter after quarter, but again don't look at any one individual quarter and overreact to include.
Got it thank you.
Your next question comes from the line then.
William Blair Your line is now.
Thanks.
The mats dollar off to provide thanks for taking my questions and solid results here. So I guess first.
I would look to dig into the federal market a little bit in what you saw in the quarter.
Just specifically around how the timing of the federal fiscal year end impacted the spending a deal flow that you saw.
Thanks, Matt, Yes, so for the quarter.
We had a really good number of new logos in the federal space and I mentioned them in my prepared remarks.
We also had our first cm suite customer. So we continue to get pulled into markets, where we havent really formally launched CEO .
So we feel like that was really good progress.
Definitely as you as you mentioned Q3 is an important end of fiscal year quarter in the federal space and so that probably contribute to some of this new logos that we're able to Poland.
Right right Thats helpful. Okay, and then second question.
Luckily enough crisis management, you mentioned a couple of times in the prepared remarks split you previously described that as a potential killer App, if you will for CEO .
So you know what have you seen in terms of early customer feedback and traction there and any kind of lessons you've learned on that front. Thank you.
Yes, so the crisis management Rollouts gone very well.
We're getting good wins, we've got some we continue to get some really nice logos there.
Cross sell up sell in some cases were able to lead with it. So we feel like it's a really good fit with the rest of the sweet and.
We're very happy with the customer feedback as you May know, we had a previous acquisition, where we had a.
Similar product called crisis commander, so we've been able to learn over the years and we think what we have as best best in class right now and we feel good about and so just continuing to roll it out and and execute on our go to market plants, but so far so good.
Got it thanks, guys good quarter.
Thank you.
Your next question comes from London, Scott Berg with Needham. Your line is now open.
Hi, everyone. Congrats on a really good quarter. Thanks for taking my questions.
Patrick one wanted to continue on Sterling's Atlantic questioning on a housekeeping first.
In terms of contributions from NC for the quarter I believe you said it was roughly $2 million revenue, but any any color on the Q2 buildings at all in the quarter.
Scott.
My favorite metric.
Now as we said.
There is the revenue contribution.
In the the upcoming 10-Q there'll be more detail on terms of.
Deferred but you also would've seen some of that in a recently filed 8-K for the legacy business. So we would just say that were really thrilled with the acquisition, it's meeting our strategic objectives, and as we integrate and right size that business.
We which will continue to happen through Q4, and as we head into next year.
We're very excited about the contribution that that it has not just financially, but more importantly strategically.
Got it well I'll ask you much more exciting question. Then this is probably for Jamie for David is now that you want to couple countrywide deals. The large one of the quarter you've had a straight you werent in Europe . What are your primary takeaways on those deals and I ask more of the question as you go forward.
More in earnest, whether it's in Europe for some of those you mandate your others, but how can you take those learnings to better capitalize and when the lions share of the business coming from those in those segments.
Yes, that's a great question. Thanks got in fact, we.
We all flew over to Europe and spend some time together kind of updating our plans in this area and we're pretty excited about it so I think.
It touches on all aspects of our strategy. So from a product strategy perspective, we believe that we've got the most comprehensive platform approach that is going to meet the needs and some of the recent.
The industry sort of guidelines that have come out continue to reinforce why our solution is the right solution for these countries. So for example, if you want to reach.
All of your population versus most of your population. That's our solution. If you want to be it will have a to a conversation versus a onetime blast and be able to leverage different technologies and different modalities to get to the customers get to the citizens and the tourists.
Over both the beginning.
Pre event the whole lifecycle of the critical event. So pre event during the event and after the event. So if you look across we believe we have a very comprehensive.
Best in class solution around how to do these population deals, we're particularly excited about the potential to take what we've learned around building ecosystems and having a network effect at the state level for a regional resiliency model. So if you look at the state of Florida, where we've been able to.
Deliver hundreds of.
Public and private institutions as part of our ecosystem. Following a statewide when we want to repeat that same type of success at the country level. So we're excited about our ability to continue to add value even after winning the initial deal.
So all that being said.
This is going to start to get more intense I think next year and into the following year as the mandate gets closer and closer so we're hiring staff and.
Putting together our marketing plans.
And creating thought leadership pieces and and talking to the necessary people to try to position on self welded to maintain our leadership position in the space.
With that I'll turn it over to Jamie might have a comment to add as well, yes. Thanks, David Scott I'd make a couple of quick comments that ties some of the questions together here and that the matic, which as you all the surprise, David Didnt start off quoting that well known lines from a Saul.
We want them all.
Because the way it has worked.
Builds on our momentum and as you can imagine.
Now that we're the only vendor worldwide global that have this four of these population.
Countrywide warning or alerting solutions, one and we are announcing new wins, not only Australia, new wins with the telco is as the roll up further in Singapore, but also the most recent one which closed just after Q4 you see the momentum building not only in the EU, but worldwide, we'd make the same comment in north.
The Americas, David did we already got three of the four largest states. So in this business. We've often said it's your referenceability your ability to deliver that is the final overwhelming factor because sometimes a lot of the technology is similar.
And in our case, we have more experience and more success behind us proven we can deliver.
So I think thats going to be.
That learning experience through all these different wins, both in the large state wins.
Trickling into federal and state and local the network effect North America as well as what David said with the four winds in Europe and now the multiple wins outside of Europe , which you've heard no one else announced like us puts us in a great position to take that learning and move forward and I might add to tie the final piece together that the majority of that those.
Customers, including most recent ones have not been build so they're not in deferred yet because some of them.
Like the recent countrywide when it just been announced just finished and formally contractually in early Q4.
And certainly have not gone into revenue yet.
Got it Thats Super helpful. It's taking the questions.
Thank you.
Your next question comes from the line, Brian Peterson with Raymond James Your line is now open.
Hi, guys, Kevin here on for Brian . Thanks for taking my call. One of the also ask about your deal pipeline and the EU I understand the decisions. They are being made now at a country wide level, but we've also seen some new wins announced for you at more of a local or regional level. So I'm. Just curious how you are seeing your overall international pipeline evolve as we started to get.
So to the deadline.
Thanks, Kevin appreciate the question.
We're very excited about what's happening internationally and we would consider continue to see really strong growth and you were hiring additional salespeople were building out the team and.
We're very optimistic about continuing to drive penetration in those markets remember, we havent, even launched we haven't even formerly launched cm and Europe , yet and we're already getting pulled into conversations with customers. So this is one of the things will be focused on as a strategic imperative for for 2020 is to do our our big Grand opening.
In Europe , and we're excited about what we think that will bring for us.
Got it.
And then just related to the state contract in California.
Curious, how I guess, you see that ramping over the near term and are there any impacts we should be mindful of as it relates to your existing public sector customers.
In the state going forward.
Well. So this is Patrick from a financial standpoint that will.
Ramp slowly over time, it's we're very excited to be.
A meaningful part of the solution for the state of California, and all citizens there and as the initial software and service that were procured get up and running we'll look for opportunities continue to add value to that over time.
So there'll be more to come there.
Thanks, I think if our experience in Florida as an indication.
When you have the state the different entities within the state want to do more business with you and we expect that same type of.
Equation work when you get the country should be able to get the states in the cities in the universities in the healthcare organizations in the corporation. So.
So we're excited about our ability to do more in California.
Your next question comes from the line Tom Roderick with Stifel. Your line is now open.
Hi, Thank you for taking my question. So I wanted to follow up on the last commentary just around Seatme expanding into Europe , you've had CMO in the marketplace for a little over a year now it's had some real nice success in the U.S. can you talk about some of the challenges are limitations to date that youve solved with respect to getting that product into.
Local European markets.
Dot where there were there localization efforts do you feel like you've had.
Good success hiring net new sales reps or is this a function of trainings.
Talking about what you've had to do to prepare the European go to market for cm and should we expect that to have sort of similar traction that we've seen in the U.S.
Yes, so I wouldn't say, it's so much problem thinks of the question. It's just sort of a normal set of requirements when you're.
Internationalizing and platform you've got various data governance regulations that require you to store data in certain places and so we had a plan that we've been.
We're going against we're now we've got data contact stores for VCC and.
That was a prerequisite and.
Other other internationalization requirements that we've been building in.
So we're moving against the plan that I think we've always talked about so there hasn't been any big surprises there I think.
This is a.
New and expanding category it is generating quite a bit of interest and as unfortunately, the way the world's going there's just more and more.
Awareness of the need for these types of solutions. So we do get a lot of inbound interest and that we're able to talk about our experience with the initial customers in North America and Theres a lot of interest how are they doing it what are the best practices. So people are looking for us to help guide them that way and so we think we're well positioned to take take advantage of that.
Excellent perfect and then follow on question for you just in terms of the BNC for acquisition. Yeah. You made multiple mentioned sort of rightsizing that business and I guess if we.
Looked at the 8-K with the financial this button $18 million business. When you brought it over can you just help us understand when you talk about rightsizing what pieces of business are not coming over to you.
And then what areas of the risk intelligence solutions that market do you want to invest more money and do you see a bigger opportunity going forward.
Yes. So so thanks again for the question so as we unpack that acquisition and we integrated we're focused on the strategic value of it.
There are great folks that come with the business and great products and some of those fit very seamlessly into what we do there are other aspects of the business that's.
You may or may not get discontinued overtime.
If we don't.
Perceive the same degree of strategic value so.
Between the haircut to deferred revenue and the when I say Rightsizing, you really optimizing for the strategic value of the business.
We anticipate that it will be.
A bit smaller than what you might have seen in financials that.
Reflect the path so.
We encourage you to think of it as a $10 million to $12 million revenue contribution going forward.
And that's really directly from the business, we think of it as a.
Really key in core part of our CEO go to market going forward.
Excellent. Thank you guys nice job.
Thanks, Thank you.
Your next question comes from delighted that sales with Bank of America Merrill Lynch Your line.
Oh, Great Hey, guys. Thanks for taking my question I wanted to ask about the efforts to sell to the telco.
Want to country deal.
I know, it's early with Australia, but.
Maybe just an update on the dialogue you've had with some of the telcos, where you've had some early.
Yes.
[noise].
Yes.
That's a fair question.
We.
I just.
At this point you to factual history, so Singapore.
We won one.
Also and then second telco.
And then we're able to follow the next year.
And the last over the next year, we're able to add to more of the telcos.
Yes, 100% marketshare effectively in Singapore.
Double the size of the overall relationship.
Generally speaking, we're targeting two or three of the top whatever is in the country.
You get three you get 85% level.
[noise] most on his margin.
Sure.
Generally three well that's what we're targeting but we generally will enter.
Hello.
All told.
Some of them may.
Platform so broad.
Let's keep ability and therefore.
Well.
For those telcos not have a solution.
And using.
Existing estimate in Australia.
The leading player.
It's also the habit.
But now after winning that opportunity I think all three telco actually looking at purchasing.
Backend to support the population alerted capability there so get it typically with the government.
A port.
And then we're trying to all of it essentially we've had a pretty good.
Well.
Opportunity.
Additional telcos.
Additional sales rather than can often doubled the size deal that we announced today.
That's great. Thanks, Thanks, Jamie and then one more if I may just on.
Deal could you remind us how many states do you have already signed and what does the pipeline looks maybe other certain regions. The U.S., where you are your further along with states any update on just kind of the effort to so would more states. Thanks again.
I mean, you probably know we set of forever at scale, we can't Washington, DC in the surrounding area as probably bigger in the state because it's 11.
12, 15 metropolitan there.
Counties around.
In the Washington Capital region.
NCR National Capital region, excuse me and then of course, we have the state of Florida, we have a state of.
Connecticut, we have the state of California, now we have Vermont.
And we have New York one of our largest so five six is the number depending on head count things.
Leaving a lot of room as David said in his prepared remarks for future success there.
Thanks, Jamie.
Thank you. Thank you.
Your next question comes from the line Aaron's lender with Suntrust Robinson Humphrey Your line.
Hey, guys. Thanks for taking my question and really nice quarter.
I see here at the federal government was strong in the quarter and in particular it was nice to hear you signed your first the M. customer now when we look at CES and federal it's been talked about before it's more so a corporate product and does this early indication with demand pull from the federal customer cm, keeping more confidence to get more aggressive in federal with the yen.
And if so is that more so a direct selling effort.
With your partners to just LCM in federal.
Yes, it's a great question. So we're excited about the fact that we continue to get pulled into.
Markets and verticals, where we're not.
Focused at this yet with the Cm suite.
I think all of these organizations if you take a step back and look at what we do.
Our ability to put together the threat data and the risk data and cure rate through all kinds of signals to too.
Get rid of the false positives in the false negatives and shorten that time to know that something happened that can impact assets.
People your brand operations, the pricing that you care about.
And then the ability to digitize and automate and orchestrate.
The response to that in a way that's very effective and managed all the communications and collaboration and all the analytics that surrounds all that data.
We find that everybody needs that I mean, the public sector needs of the private sector need that and so the cm suite is really tying all that together. So we do think it'll they'll continue to be more interest in terms of how we're prioritizing it.
We will continue to take it slowly in the federal space and really I think generally speaking the federal space, it's going to be expanding our routes to market expanding our ability to engage with prospective customers and I think there's going to be good appetite for for all the products and solutions that we've got.
Great. Thanks nice job.
Thank you. Thank you.
Your next question comes from the line will power with Baird. Your line is now open.
Hey, Thanks for taking my question. This is actually Charlie Ehrlich on for will.
Could you help us understand the revenue flow through associated with some of these large state in country wins, Jamie you mentioned earlier that some of the large state wins this quarter haven't hit deferred revenue yet so what's the normal timeline or cadence from booking a deal and that hits deferred revenue and then when can we start to see revenue kind of hit the income.
Payment.
So this is Patrick thank you for the question. It these are.
They are large deals and they tend to have a number of different parties that participate in them and so.
The initial revenue that we see coming from those tends to be focused entirely on implementation services and.
That can take a while these.
As you've heard earlier on the call in previous conversations that could be multiple telcos involved is the government involved and so.
In one of the deals that we won in the past that could take upwards of 12 months of services to get these implemented then on we turn these on there will be license revenue. So really this is a story that that's building for 2020 revenue and then as we win.
The mall as Jamie said earlier in the in the EU than we hoped that'll be a really revenue story for 2020 122. So it takes a while to play out.
Great. That's really helpful. Thanks for answering the question and congrats.
Thank you. Thank you thanks.
Your next question comes from the longer Brian Williams, Steve Your line is still up.
Hey, guys congrats on the quarter double cooking again on the public warning opportunity and Patrick you May have just mentioned it but in terms of.
I know, it's too early but on the implementation side could there be any significant revenues from public warning deal.
Either from the front end or the backend. Thanks.
Yes, yes, there could.
As we've spoken about.
Over the past probably few quarters.
When we acquired you asked a lot of their deals that were in flight, we're not necessarily written with revenue recognition in mind they were written.
So when the deal and then recognize whatever revenue comes with it and so as a result, some of those were really you end up structuring those as an accounting for them as.
On Prem perpetual licenses and so there are somewhere.
You can end up having a pop and the license revenue in that ultimately gets turned on their others, where we can we'll be able to recognize some ratably and of course, we strongly prefer the latter bucket. So as we go here and we're implementing it is possible to turn on.
Components of licenses and to whatever extent that.
Those are accounted for as perpetual and those will pop quickly.
But there hasn't been.
There has been much of that like I said as we.
Do mountain, we look at this entire public warning opportunity.
We expect to see increasing amounts of revenue as we head into 2020 and beyond.
Great. Thanks, again for taking the questions.
Yes.
Your next question comes from the line, Mike Levin more with Northland capital markets Your line.
Hi, This is if we get a dealer FARA Mike Latimore.
How much bigger is the California being back on your next largest state wide beam.
Well, we don't talk about whether or not to talk about some in the public deals. So you guys have done the research in the past and the state of Florida deal publicly as exposed as it's not the total size, but its publicly suppose is roughly three three and half million and California dealers.
Yet again, almost 50% larger than that at almost $5 million. So that's not all was the total deal because they grow as we discussed and mentioned last quarter, we sold the resident connection in Q3.
To this stated Kelk the state of Florida that grew the relationship.
And we expect to be able to cross sell in Upsells substantial additional business in the city, California, but the initial contracts were in the 3 million.
And $5 million category for those two states, respectively, and that's public information you can see in the public bid documentation.
Yes, that's the ending number annual number for the five year contract, where you can extend it to 10 years, so total contract value.
But.
Okay. So just a follow up on this one.
Could you comment generally on your average deal size and the length of the contract.
We'll average deal sizes in general continue to be.
Up into the right. When you look at them over time, so we're up to 75000 or on a trailing 12 month basis. You years ago that was 30000. So we are optimizing the model first and foremost for continuing to expand our value proposition and sell larger deals with multiple products.
Higher in water within organizations and you see with our performance to date and all the metrics that describe that you see that we continue to make progress on that front.
Thank you.
Thank you.
We had no credit question at this time I will now turn the call back.
I'll go back to Mr., David on CEO .
We might.
Yes. Thank you everyone for joining I'm really happy to be at Everbridge. It's a great team great mission keep people say, if and businesses running and leading technology. So look forward to talk into next quarter.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation you may disconnect.