Q1 2020 Earnings Call
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Ladies and gentlemen, the Copel Bergen momentarily until that time airlines someone can be placed on music old thinking in advance for your patience.
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Good morning, My name is Jacob I'll be your conference operator today at this time element to welcome everyone to the Everbridge first quarter earnings Conference call. As a reminder, all participants are in a listen only mode.
Later, we will conduct a question and answer session.
If you have a question during this time simply press Star then the number one on your telephone keypad.
He would like to withdraw your question simply press the pound key.
I'll now turn the call over to your host Patrick Brinkley, Sir. Please go ahead.
Good afternoon, and welcome to Everbridge <unk> earnings Conference call for the first quarter of 2020. This is Patrick correctly, Senior Vice President and Chief Financial Officer of Everbridge with me on the call today, our Genie Ellertson executive Chairman and David Meritas CEO.
After the market close today, we issued a press release with details regarding our first quarter results, which can be accessed on the investor Relations section of our website at <unk> Everbridge dotcom.
This call is being recorded in 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 maybe considered forward looking under federal Securities Law. 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 should today for a further discussion of the material risks another important factors that could affect our actual results. Please refer to our filings with the FCC, including.
Our recent 10-Q 10-K filings.
Also during the course of today's call 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 of responses to your questions. We may offer much trucks are incremental to our usual presentation to provide greater insight into the dynamics of our business for our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future.
With that let me turn the call over to Jamie and David for their prepared remarks, Jamie.
Thanks, Patrick.
Thanks to all of you joining our first quarter 2020 earnings call today.
I'd like to kick off my short prepared remarks.
But recognizing all the public safety first responder medical professionals that continue to keep a safe this global pandemic.
In many ways. This is the largest critical than in recent history with total loss of life now exceeding 225000 economic costs now estimated over four trillion dollars.
The breadth of the pandemic is unprecedented.
It has affected every facet of our global economy, and small businesses to large fortune 500 organizations.
Our employees that physical assets like offices stores, the plants, the supply chain and even their customers.
Organizations face an incredible challenge as Jamie Diamond CEO JP Morgan recently stated the country was not prepared and further he suggested that what we actually need and I quote is a pandemic playbook.
In fact, all critical that management suite forms the modern day playbook for everything from active shootings to work gains to pay identics.
Our first quarter strong performance, where our financial results easily exceeded our guidance ranges continue to demonstrate the rapid adoption of ours critical that management solutions.
We are grateful that so many organizations or deploying it to monitor the direct impact of the virus on the things they care about most.
To automate and orchestrate their responses the virus and to communicate the information needed by people to access services and remain safe from the virus.
In the quarter, we saw numerous new see yen deployments for coal, but 19 use cases.
As well as you're missing customers, including the most impacted cities and state supporting hundreds of thousands to tens of millions of citizens as wells numerous multinational corporations focused on their employees across the globe.
Since early January we've witnessed the significant spike in the use of C E M.
With hundreds of millions of cobot 19 related messages delivered since the middle of March we're gratified that both our team and our technology has met this challenge delivering service levels that are multiple times greater than any of them in our organizations history.
For example, we've been able to go from initial contact to functioning CRM solution for large new customers in as little as 48 hours.
And we continued to see strong renewal activity, including from customers in markets that are disproportionately impacted by the pandemic such as retail and travel.
So use cases ranged from communicating critical information to large populations like New York City, Florida.
Organizations, managing individual employee infections, where contact tracing and proper quarantine measures are critical to their continuing operations.
Given the overwhelming need as many of our core markets from healthcare government to corporations. It it's not surprising that we continue to deliver strong business results, but perhaps more important than helping everbridge to exceed its financial targets.
Pandemic has driven a fundamental awareness of C N as a category.
That's really becoming the catalyst for all organizations to the boy critical event management.
Over the past three months or existing and prospective customers have moved from discussing why they might need C M or how they would justify such a solution to requesting the best practices as to how they implement the C.E.M. Hennig playbook immediately.
The buyers have moved from being a single resilience or security professional.
Often including a C level officer responsible for the organizations most valued assets.
This pandemic is firmly raised the priority of resiliency or safety solutions to ensure any organizations assets from people to business operations can be sustained throughout such a global critical event.
And our leadership position in this over 40 billion dollar addressable market has never been more clear.
We define this market.
We developed the first integrated C. N suite, we have successfully deployed at many of the most prominent organizations and now with our packages like our cobot she'll solution.
We have effectively with the playbook for critical that management.
Such as a pandemic.
To keep people say and their businesses running.
We believe the rapid market recognition. This pandemic has ushered in will enable us to accelerate our leadership of this important market as well as execute our overall growth plans well into the future.
And like so many of the past significant natural that's what we discussed in previous calls such as Hurricanes.
The recovery from a major critical then often involves more work than the event itself.
The grown the virus pandemic will be no different getting back to normal will require almost every organization to be able to limit gatherings or workplaces to say social distancing guidelines.
Monitoring travel for people to ensure their routes do not take them into areas, where they may be infected or have become infected.
Identifying those employees.
Cool with proper testing are found to be affected and then but contact tracing utilizing our CRM capabilities to gather and analyze people assets and sensor data or pass.
Information in the workplace, such as specific physical asking access control that plant.
Buildings are stores down the specific floors were meeting room locations as well as our ability to monitor those for a more mobile or even travel information for those making longer journeys all to enable organizations to rapidly take action to communicate and quarantine those impacted where there.
I think and to ensure that the business operations can be maintained.
And importantly, RCM solutions provide these functions for organizations have won two hundreds of thousands of people globally at scale and predictably, a service, which others other providers cannot match.
Although it is most likely obvious to all of you quote a virus is a very strong use case for C. E. M. Unfortunately, it is not the only one.
As we move forward, we're more committed than ever to ensure all organizations, both public and private acquire and can implement a critical that playbook to ensure that during the next critical will then be it a natural disaster or a man made one they keep their people safe in the business is running.
Moving forward RCM strategy, and our strong first quarter financial performance position as well to achieve our increased expectations for 2020, and we believe our new eye on T. sensor management functionality competes coupled with enhanced population morning capabilities further extend our market leadership will help us accelerate our country wide wins.
As we look at.
In closing I must mention that again.
[laughter] tremendous efforts of our team beginning with David Meredith Adler CEO and the leadership team and.
And supported everyday by our entire employee population to serve and support the broader first responder community. During this pandemic.
As one example of our support for public safety organizations. Our team came together with new tried it foundation charitable organization to target a $250000 donation was the CDC Foundation.
With the continued rapid adoption to see yen as a must have solution for all organizations and the proof points of our growing customer base and strong financial results were well positioned for ongoing success now allow me to pass the call over to David to provide details on our Q1 performance.
And how we see the rest of the you're playing out David.
Thanks, Jamie.
I'm proud of our team stepped up to the challenges created by the Cup at 19 pandemic.
For our customers as well as our team's ability to serve those customers. During this difficult time of great need.
We are a mission driven company and our mission is to keep people safe and organizations running during critical events. This mission has never been more important than it is today.
The covet 19 pandemic is what we consider to be a black Swan.
An unexpected events the changes everything.
But ultimately was obvious in hindsight.
Like many other clinical events Coven 19 is global it's happening everywhere at the same time and its persistent it's not like a hurricane or a power outage that last one weekend or one week, it's continuous and it's a pervasive disruptor across all of the market that we serve especially our heroic 30, 701st responder cut.
Summers.
We have frequently talks about the almost $500 billion economic losses, each year due to critical events, which frames our addressable market of over $40 billion as Jamie mentioned Tobin 19 is now estimated to cause over four trillion dollars an economic loss this year alone.
And we have responded accordingly.
Despite all time high usage of our solutions, our systems upscale effectively and efficiently justice they were designed to do.
And of course, our south operating model translates very well to getting customers implemented remotely with the exception of a minority of our deals such as large countrywide systems.
I'm extremely proud of our bridgers, who are working harder than ever and living our mission.
In Q1, we launched our new turnkey Cobot, 19, she'll solution, which helps to protect employees and maintain customer operations throughout the pandemic.
And now as most corporations have successfully instituted variations of work from home initiatives, we're helping customers evaluate returned to work strategies for implementation in the months ahead.
With that backdrop as you might expect we saw an uptick in new customer interest during the quarter. Many of these customers had already been evaluating our platform and the covet 19 crisis accelerated the completion of some transactions that we had expected to close later in the year.
Existing customers also further recognize the value of our platform and expanded their deployments in the first quarter to help keep people save and their businesses running.
As a result, our first quarter revenue of $58.9 million exceeded the high end of our guidance range. We also exceeded our profitability guidance, even though we saw a combination of historically high volumes across all aspects of our platform as well as a dramatic increase in a number of inbound customer requests for support as it.
Look to leverage our platform across new use cases.
In Q1, our adjusted EBITDA loss of $4.8 million in the quarter beat the top end of our guidance by more than $700000.
Turning to some of the details as I mentioned, our strong first quarter results were characterized by a significant number of new customers as well as by very strong renewal and expansion activity at existing customers.
All supported by the growing awareness of critical event management solution as they must have solution for these challenging times.
Looking at our first quarter performance, we outperformed on almost every one of our key metrics. We added a strong 194 net new enterprise customers in Q1, bringing our total enterprise customer count to 5218.
Over the long term, we will continue to target 125, net new customer additions each quarter.
During Q1 of these new customer selected our sweet and Multiproduct packages at the highest rate in our history with result for both up dramatically over the previous year, our multi product deal count of 129 grew by over 40% from year ago, and we achieved the near record levels of $100000 plus.
Transactions 40 of them up 82%.
Well as the number of deals over $200000, increasing by 110% year over year.
We had another good quarter for cm with 10, additional CEF customers up from seven new customers a year ago, while our total number of T. M customers has doubled and just one year, we still have 98% of our over 5000 enterprise customers yet to upgrade to our full cm suite.
Average selling price for the last four quarters increased Thomas $74000 into first quarter from $71000 a year ago, a combination of our healthy large deal volumes as well as our continued C.E.M. success supported this increase in our ASP.
And we continue to see contributions to our growth from both our newer products and our core products with 53% of new in gross sales over the last four quarters coming from new products in Q1.
This healthy balance of our historic mass notification and population weren't in solutions and our continuing Seatme success supports the long term growth of our business.
Our international business continued its recent success and represented 20% of our record Q1 revenue.
Finally, our revenue mix by vertical was consistent with recent history coming in at 59% from corporate 29% from local state and countrywide government and 12% from health care.
Indicating that our growth remains broad based.
While these metrics all represent continued progress in driving our growth we want to remind you that these quarterly metrics can fluctuate, especially after a strong first quarter like this one but our optimism and confidence are clearly substantiated by these metrics.
Now allow me to provide a little more detail in the form of marketing customer stories behind our strong Q1 metrics to be again, it's clear that customers are using our platform to help keep people safe and manage their business operations during a rapidly changing environment. In fact Q1 represent the highest customer engagement levels in our history.
Customers are heavily depending on all the applications within our CRM platform.
For example, our large corporate customers such as a large global package delivery and shipping company relied on our visual command center and safety connection solutions to understand and respond to data regarding quarantines shelter in place orders production stoppages and air travel restrictions both to keep their employees say as well as to keep.
Our global delivery business operating by managing deliveries differently and quarantine areas as just one example.
Our new C.M. wins include additional industry and category leaders, who are selecting everbridge and are willing to go public with their decision at Goldman Sachs and others did in Q4.
First quarter Cm highlights include global networking powerhouse Cisco important not only because they selected our full seatme suite to keep people safe and that business running but also because they represent another high profile success from our growing channel partner initiative.
In addition, Bristol Myers Squibb, the pharmaceutical leader, a 300 locations and 50000 employees became a new everbridge customer in the first quarter by choosing CEO in a multiyear deal.
Other new CRM customers in the quarter included a leading multinational cyber security company, a fortune 50 technology company operating in 70 countries a top three commercial real estate services company, a fortune 500 technology company, one of the world's leading discount retailers.
4000 employee aerospace contractor.
One of the largest pharmaceutical companies in the world and an international Science and Technology company.
In addition to see him wins in the quarter, we continue to see new customers choose our other products and expand relationships at a record pace, including organizations like Lincoln Financial Group Kellogg Brown and route Blackstone consulting and National grid, who selected our mass notification instead of communications and data Center solutions.
Q1, new customers came from multiple verticals as well, including education, where we recorded record where we recorded wins at leading institutions like how safe Fullerton College of Charleston, and Florida State University.
We also expanded relationships with Fordham University, MIT and Texas am.
Our momentum was even more pronounced in the public sector, where we saw strong new and growth activity matched by record levels of engagement as the pandemic activity escalated towards the ended the quarter. In fact, one of the primary drivers of adoption for major cities like New York in Boston is our solutions scale and Multilink.
We'll capabilities, a combination which cannot be matched by smaller competitors.
Additionally, our customers are using everbridge to support at risk segment segment of their population such as several counties in Florida that are performing routine help checks for their elderly population and directing them to needed assistance when appropriate.
And the first quarter, we signed several government wins on multiple continents, including with Bergen, The second largest city in Norway, and we expanded our relationship with the state of Odisha in India.
Additionally, early in the second quarter, we announced a win with the health Directorate of the country of Norway, which we were able to deploy and just nine days.
Within our broad government market segment, we saw strong activity in the U.S federal market in Q1 contracts include a growth deals to support one of our largest customers. The U.S. armies Jarvis program, which leverages, our technology to assess and respond to cover 19 in over 400 military locations across more than 70 countries.
Other new contract. Examples include the U.S. Department of interior administers our National Park service.
And at the state level, we announced another significant statewide deals for the Commonwealth and Massachusetts, which we highlighted at our recent virtual analyst day event.
The state selection of Everbridge is important because it marks another highly competitive win.
As well as the jurisdiction that we are headquartered in and our team is proud to be the state wide solution.
Almost immediately after our rapid implementation in the Massachusetts solution, we saw the governor of Massachusetts, naming Everbridge multiple times in public speeches, that's an important partner to the state and mitigating the current of ours pandemic.
Other states in cities also leveraged Everbridge platform, such as New York, who has been a customer for more than two years and dramatically increased their usage to address cobot since the viruses arrival.
This engagement helps drive the continuation of network effects in New York and in the first quarter, we signed an expansion within New York City Council and new business at the New York City Department of Education. It was leveraging our platform to communicate with parents to ensure students have all the equipment they need to be successful and to coordinate delivery if necessary.
Other examples of our network effects were evident in states like Minnesota, where Theyre Department of Human services and Department a better in a fair signed up New Jersey, where the state's department of Treasury became a customer count.
Kornya, where new customers such as the city of Santa Monica, The County of Alameda and the Los Angeles Board of Supervisors, all became new customers.
Interestingly, our first quarter public sector growth was not limited to our traditional public safety buyer with new contracts coming in from organizations like the Cook County Department of public Health and Illinois, The second largest county in the United States and new use cases like the state of or not to disclose the use of everbridge in early April to enable.
Secure and remote legislative boding, well following social distancing protocols. An example, we think other legislative bodies could also leveraged.
Well, our momentum with new and existing customer expansions was impressive in the quarter customers in certain verticals are certainly struggling such as hospitality in some retail.
We continue to support these customers and our monitoring how they and we could be impacted in the longer term.
That said, it's notable that during Q1, we saw these customers continue to prioritize.
And in some cases expand their everbridge relationships at the Cobot 19 pandemic accelerated.
For example, we closed the new deal for risks center with one of the global oil companies and one of our shorter sales cycle ever just 24 hours as the company realize they needed a solution immediately to help manage their response to cope with 19 across our diverse global footprint.
In the retail space one of the leading American luxury department stores added our risk center solution to their everbridge implementation to assist them in monitoring the spread of the covet 19 virus.
Another retail example would be one of the world's largest discount retailers, which I mentioned earlier, who upgraded their existing risk centric solution to CEO.
Adding BCC and crisis management and a six figure growth deal. This retailer have been considering fee and for over 12 months and the escalating covered 19 crisis help them realize how important is have a comprehensive solution in place to protect all of their employees in operations.
And the travel market one of the world's leading hotel chains renew their relationship in a multiyear deals as well as a large Las Vegas based hotel group, who also signed a sizable renewal in the quarter. The fact that these corporations are prioritizing their everbridge deployments at this time demonstrates that we are increasingly viewed as a must have.
Realty for corporations, even those facing severe business challenges from covet 19.
It's now a few words about the technology tuck in acquisition that we completed near the end of Q1.
In March we announced the most scalable comprehensive public warning system for entire countries.
Our solution enables countries or regions to use multiple modalities such as location based mobile alerting sell broadcast technology and group based mobile alerts to communicate to the entirety of UN impacted region, including best residents and visitors.
In support of this strategy, we announced the acquisition of one to many in late March which we discussed at our recent analyst meeting.
One of many has been instrumental in establishing the standards for population morning with cell broadcasting.
And previously partner Everbridge on countrywide wins in Sweden, and Greece.
We are now better position than ever to lead this market in the years ahead and to achieve our target target, reaching 3 billion people around the globe by 2024.
In summary, I am pleased with our team's dedication and expertise to quickly respond to the increased demands we see across our company as we help customers responded the cobot 19 pandemic. This tragedy highlights the importance of our platform to our customers and prospects and accelerate adoption by customers who were in the evaluation process.
We look forward to continuing to enhance and expand our capabilities to reinforce our position as the industry standard for excellence and to further extend our leadership in this multi million dollar market.
Now I will turn the call over to Patrick for more details on our first quarter financial performance and our guidance for Q2 and full year 2020, Patrick.
Thanks, David I will review, our financial highlights from the first quarter and then provide guidance for the second quarter and the full year.
Our first quarter was characterized by strength in all our target markets and across the applications of our platform with particularly strong net customer additions revenue in first quarter was $58.9 million up 38% from year ago and exceeding our guidance.
Adjusted EBITDA for the quarter also exceeded our guidance at a loss of negative $4.8 million.
Our dollar based net retention rate remains consistently above 110% as we continue to provide significant value to our existing customers. The first quarter was characterized by a record 194 net enterprise customer additions amid the early days of the coated 19 pandemic as a result, we had over 5200 enterprise customers have.
We ended the quarter of course as you might expect this number of net customer adds put some downward pressure on average deal size, but this impact was largely offset by strong metrics for deals over $100000, which number 40 in the quarter.
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 66.8% down a little over two percentage points as we had four warned might happen temporarily.
Due to the cost of partial delivery of one country wide deployment as well as accelerated implementation efforts increased coven related volumes and the impact of recent acquisitions as always keep in mind that quarterly gross margins may fluctuate from period to period and may not be considered indicative of any longer term trends.
Total operating expenses in the quarter were $46.6 million, an increase of 39% from year ago, reflecting continued investments in our platform and our go to market strategy.
Adjusted EBITDA beat our guidance range at a loss that was better than guidance at $4.8 million compared to a loss of $1.9 million in the year ago period.
Net income in first quarter was a loss of $5.5 million or 16 cents per share compared to a net loss of $3.5 million or 11 cents per share a year ago.
Note that to be more in line with pure reporting.
Non-GAAP net loss now adds back the accretion interest on our convertible notes.
This was not considered in our prior reconciliation to guidance.
Including this noncash expense non-GAAP net loss would have been $10.9 million or 32 cents per share, which was better than our guidance range compared to a net loss of $4.7 million or 15 cents per share a year ago.
On a GAAP basis, our net loss was $25.4 million also better than our guidance range.
Turning to our balance sheet, we ended the quarter with $506.5 million in cash cash equivalents restricted cash and short term investments compared to $539.7 million at the end of the fourth quarter, reflecting the impact of the three tuck in acquisitions, we completed during the quarter.
Free cash flow was an outflow of $1.7 million in the first quarter compared to an inflow of $3.9 million a year ago.
Total deferred revenue was $145.5 million that the ended the quarter, an increase of 48% from year ago.
As always we will note again that 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 and the timing of annual billings for new and existing customers as such the change in deferred revenue on a quarterly basis is not always a meaningful indicator of the underlying momentum.
Our business that we believe its growth, it's directionally relevant on a longer term basis.
Now, let me turn to our outlook for second quarter end the year.
After a record first quarter, we remain optimistic about our expectations for the year.
At the same time, while customer activity has been strong amid the worldwide pandemic customers in certain verticals, such as travel and retail could see some pressure in the quarters ahead, even though these customers continued to prioritize critical event management in the first quarter.
Similarly.
There is increased uncertainty around the timing of some large countrywide deployment.
Which could have a direct impact on the timing of revenue recognition over the next few quarters.
Our guidance considers and were strong first quarter performance increased uncertainty within some market segments and a very small revenue contribution from our acquisition of one to many which was not considered in prior guidance.
Once the many represents an important acquisition that will be particularly strategic as you countries explore countrywide population boarding systems next year.
For the remainder of 2020, we expect the revenue contribution from one to many to be relatively immaterial less than $1 million.
From an expense perspective, the one to many acquisition will put near term pressure on profitability, but we expect this headwind to turn into a tailwind in 2021.
With that backdrop for the second quarter, we anticipate revenue of between 62.9 and $63.3 million representing growth of 30% to 31%.
We anticipate adjusted EBITDA to be a lot of between 4.2 and $3.8 million.
We anticipate a non-GAAP net loss of between 7.4 and $7.0 million or loss of between 22 and 20 cents per share based on 34.3 million basic and diluted weighted average shares outstanding.
Stock based compensation expense is expected to be approximately $11.4 million in the second quarter.
For the full year.
We now expect revenue to be in the range of $261.5 million to $263.5 million representing growth of 30% to 31%.
We continue to anticipate adjusted EBITDA to be in the range of $6 million to $7 million.
We expect to now.
Non-GAAP net loss of between 6.6 and $5.6 million or between 19, and 16 cents per share based on 34.3 million basic and diluted weighted average shares outstanding.
This guidance assumes estimated stock based compensation expenses of approximately $49.8 million for the year.
And we continue to anticipate that free cash flow will be approximately breakeven and perhaps slightly positive for the year.
In summary, amid a global pandemic, our mission to help keep people safe and businesses running has never been more important.
We are proud of the contributions we were able to make to our customers and their constituents.
As the unqualified leader in critical event management, it's gratifying to realize we're making a crucial different than people's lives.
Our momentum in the first quarter leaves us well positioned to deliver a strong performance in 2020 and beyond as we continue to serve the multibillion dollar opportunity ahead of us.
Now operator, we'd like to open the call for questions.
Thank you well now open the line for questions. As a reminder, everyone. You May press star one to ask an audio question. Please limit your questions to one question and one follow up.
We'll pause for a moment to compile the keep an eye roster.
And we have a question from Scott Berg. Please go ahead Sir.
Hey, guys. This is Josh on for Scott I, Congrats on the strong quarter.
Maybe just starting out given what's going on in Norway with that the strong messaging on the platform curious about the comments about the delay in deployments.
For us some countrywide deals and how that shapes up versus your prior expectations, maybe get some more color on that.
Hey, Josh. Thank you this is Dave and appreciate the question.
Yeah, we were really pleased in Norway, we had the two largest carriers and we were reaching about 90% of the population and the Norway Health Directorate wanted to.
Span that to 100% an ad.
One more carrier and we were able to get that on a nine days, which is record time and that we're very proud of our team and that's a good work being done by the government in Norway I should mention.
One of the benefits that we have been able to work with so many countries around the world and so many states, we're really able to see best practices and have so many different use cases, so Norway is a great example, if you look at what they're doing and their numbers.
They're doing a fantastic job mitigating the current a virus and they're very aggressively using our platform to help keep their population and farm, they're able to send out messages to the entire population of almost five and a half million people are the same time with no message congestion, they're able to use the platform to communicate with their citizens are traveling another.
Entries and trying to get back to Norway, and help them, they're able to communicate to visitors that are in the country and do that in multiple languages, six or seven languages, I think elastic message they say sent out.
And they're also using the platform to help with social dispensing and having municipalities throughout the country.
Able to use the platform and if they have incident zone, where they want to make sure that it's not getting to dance in terms of people per square feet, they're able to message that people, let them know, but do it in a way that protects the privacy.
Of those people with no personal identifying information being used so it's incredibly powerful what the government in Norway is doing with our platform and we're very proud to be partner with them and I'm absolutely convinced that a saving lives to your question. There are other projects going on and.
In some cases those projects are.
The vast majority of our businesses Hsas and were able to implement remotely and we've had great success with that through this.
Current virus period, so far but we do have a few projects where you do have to get on site and do work and those projects. There's always the potential that they could get delayed and and that's why I wanted to give you adds up because in that case.
It might move from one quarter to the other and something that we're managing very closely and we feel good about but we want it to mention it. Thank you.
Okay, Great and then not just a follow up how should we think about hiring for the year did you guys Frontload hires in January and February given the strong Q over Q increase in sales and marketing and initial momentum for the year and should we assume a slow down for the balance of the year and kind of given the macro outlook.
Patrick do you want to start with up.
Sure, Yes, hi, Josh So we did do our typical front loading of hiring for the year we've.
We always try to get.
Far ahead on our sales capacity and we ended Q1 with most of our capacity built out for 2021, because we want those reps to be able to learn and be able to sell the platform throughout this year. So that they are contributing.
At 100% productivity and 2021 so.
Yes, as you will see typical seasonality in our adjusted EBITDA in Q1 and that will improve.
During the course of the year.
Great. Thanks, guys.
Thanks.
Thank you we have a question from Sterling Auty.
Yeah. Thanks, Hi, guys I want to hopefully balance out you know the commentary on one hand, you've got the fast start program, which is amazing and then you've got to your point on some of the country wide, maybe some delays because you can't get on site. What do you kind of the average implementation that you think you're going to it.
Variance through this environment. The require ask is you know with that deferred revenue, which was so strong in the quarter help us kind of think about the.
The timing of the waterfall of how that will fall into revenue through the year.
Well I'll just make a general comment that the vast majority of our business is a cloud based SaaS business and so.
We're able to implement remotely and quickly and our customers are more motivated than usual, but you know this is a unusual time and there's all kinds of different customers and different circumstances and I'm. There are some edge cases, but Patrick do want to comment on the kind of the average assumptions.
Yeah, I think Sterling, we were really excited about the growing backlog as well as our growing pipeline and as David said, a 90% plus about our business in south. So we anticipate that we'll be able to continue to to implement.
Then as quickly as customers are able to implement we just as we sit here.
Looking out the uncertainty that that's some of our customers are experiencing we just oh, we want to take a prudent approach here and if things continue to to fall into two waterfall into revenue is they have historically then that'll be strengths that we can.
I used to potentially outperform expectations, but as we sit here today, we just want to take a prudent approach and provide prudent guidance.
I think that makes sense and one follow up question would be around the exposure to those hard hit industries. You know companies like service now, it's 20% they disclose fivenine disclosed, 15%, where where's your level of exposure to those hardest hit industries.
You know, we're trying to stay very close to our customers and I can tell you we had inbound call volume and and engagement from our customer base like we've never seen in our history and we actually speaking of implementation I mean, we were throwing a lot of implementation resources because people wanting to get up and running quickly and you'll see some.
That.
The as we commented in the prepared remarks.
We were really pleased.
Pleased to see that even in some of the hard in industries, we've got customers signing growth deal signing new deals.
Signing Rick multi year renewals, so we're going to keep a close eye on that but so far so far so good.
Yeah, they need to just one added common sterling or you know when you think about what we have talked about since our IPO, which is that our top three markets by vertical or a general corporate which makes up you know fortune 1000, not primarily retail and travel friends.
There's a banks financial institutions major tech companies very large manufacturers.
Then a government and health care.
You can you have to go past, 80% of our employee population to get into verticals that are or that are the most severely hit and as David said, we're a core system that those people are using during the pandemic not only manage the impact but also for based community.
Haitian.
Critical communication, so it's not a phone call generally out to customers or something you think of that is maybe something you could or couldn't turn off its or lifeline to employees.
And their supply chains as an example, so we've seen you're relatively little pushback, there, but as a direct answer to your question those affected verticals or not in our top five.
Perfect. Thank you guys.
Thanks Sara.
Thank you will have a question for Matt Stover.
Hi, guys. Thanks, Thanks for taking my questions. Greg soon strong results just a few quick ones for me today.
So would love to go through kind of what you're seeing in terms of.
You know spent new versus existing customers a sound like there was a healthy pull into the first quarter or at least conversations are going on.
An acceleration there if a finger in the pipeline so would love to get any commentary on kind of the what net revenue retention looked like in the quarter and I'm looking at guidance.
You know how much of the thought process and guidance is based on revenue coming from that existing base versus new customers coming into the into the business.
Yeah. Thanks, Matt This is David I'll start by saying it was a very strong quarter really across every geography in every segment. So.
Good renewals good growth good new customers coming in and get some amazing new logos that we added some of which we talked about in the prepared remarks.
As far as the net retention I think we typically say, it's over 110% and and again it was over 110%. So I'm just I would say overall very balanced vary from quarter to Patrick if you want add anything.
Yeah, and a strong backlog and stronger pipeline of both new and growth deal. So we are we are humming on all cylinders that but but.
So when you add directly about guidance I would just say we're also.
Trying to take a prudent approach here.
Because [laughter], yes, no one could have predicted each of the past six or seven weeks and I'm just wary that it's hard to predict the next few weeks, but we do head into it with strong momentum and we.
We expect to keep going Oh with good progress.
Right right that's helpful.
Then I think when you mentioned Cisco in the prepared remarks, you mentioned it was a partner driven when we look to dig into you know how that you'll kind about what the where the partner played a part of that go to market and just maybe thinking about a little bit. Thank you.
Yes.
Yeah generally we've talked about the fact that we're going to increase our routes to market with partners. There's multiple varieties of partner. So we system integrators. For example, we run our largest deal in our history with the system integrator partnership in California.
The Master agent summation community and that's an area, where we hired an experience executive who has been doing that for several years and come in with a lot of relationships and getting that stood up now.
The OEM partnerships that have been successful in recent years that we continue to to work with and and then.
Services based firms for example, like control risks, we talked about the fact that they actually created and they've been around for 45 years, there and with a lot of Fortune 500, Global 2000, and they've created a critical event management practice area.
Which is based on.
Best practices and essentially how to use our platform, which is just another validation point around C.M., becoming.
A bigger and more relevant and a category that more people are aware of as far as the specifics Cisco deal I don't think we're disclosing the details about how that came about but it definitely did come through a partner and well go back and see if we can share more.
At an upcoming Investor day, if that's okay. Thank you.
Got it yes. Thank you for taking my questions.
And Sir your line is open.
And can you hear me Sir.
Hello does this mean.
There you are yeah. We can you go ahead.
Oh, Hey, Brad Zelnick with quite a credit Suisse, sorry, guys I didn't hear the antero. Thanks for taking the questions Hi, Brad.
Hey, guys congrats listen to as we think about the pipeline David for both population alerting and C. M to what extent is the pandemic serving to pull demand forward accelerating existing deals that when the pipe, which is actually creating new opportunities that haven't been in the universe whatsoever.
Yeah, Thanks to the question I.
I think the answer is both [noise].
We are you know we've said for a long time that.
Really every.
Fortune 500 companies should have critical management platform every state.
City countries should have it every health care and you had some companies that were forward thinking but it really is really an issue not a question of if you would need it but when and what type of critical about and how prepared to me and I think just the awareness level of this now.
We used to be we would go talk to the Chief Security Officer, Chief risk officer, and they loved us and thought with great and then we'd have to work with them to help get funding.
And just trying to get in front of the board CEO well now every CEO in the world is focused on on figuring this out and when they have to move their entire workforce to work from home, they're calling up and say hey help us help us manage this transition help us keep track of our employees that are they're all remote now and all the things that we do and we've been doing for years and we're doing it for.
Countries and we're doing it for 1500 health care providers and answer out. So I think I think there's a general increase and the overall level of awareness and I think that's kind of flowing through all the different opportunities.
No we do these thought leadership.
Round tables personal round tables, and we're getting 3000 people showing up we're doing in event on the road to recovery for kind of Iris and I don't know if you notice we announced today a.
Returned to work set of software solutions, leveraging RCM platform.
For businesses and governments. So we're going to talk a lot about that we've got a virtual event sea level of meant coming up in May and we've got Dr., Scott got leaving room Sta. He sees a leading expert on current virus now one of our keynotes and general Colin Powell, who is.
You know, obviously, a great leader and Weve C level executives from Accenture and Biogen and the CEO. The CDC Foundation. So yeah. We're just it's just another level of awareness of the C suite and so I think that really goes across everything.
Great and maybe if I could just ask a follow up how should we think about the puts and takes around the country wide adoption given the pandemic and the comments that you made in your prepared remarks, and and does this change the timing of when we should see the you adopt the solution how are those conversations progressing since cobot 19 emerged.
Well I think it's still too early to tell on the one hand.
I think we can help and this return to work solution that we just launched really puts a finer point on it because its directed for businesses and how businesses can help.
Kind of take control of their own destiny, but also for countries and for states and cities. So we're going to probably talking more about this Norway example, because I just I think it's amazing what they're doing in Norway, and it's definitely having an impact.
And.
We are seeing increased or if I activity, but on the one hand, I think there's more interest on the other hand everyone's putting a fire. So you don't really know how that's all going to net out I think we have to keep we have to keep.
Tracking at monthly, but we're not really assuming we don't we haven't made any assumptions about moving our expected timeline for the deals, but it's possible that it could change.
Understood. Thank you.
Thank you. Thank you.
Our next question comes from Ryan Mcwilliams with Stephens, Inc.
Thanks next taking the questions. So just on individual Massification sales has there been any impact to go to market. As a result was shifts the remote work like or customers holding off until they are back in the office or is it more difficult selling without being on site or another hand have you seen this increase due to cook.
<unk>.
Well there are cross currents because on the one hand, you can't go do a physical sales calls for sale call for the most part and conferences have all been canceled and and that does make it more difficult than does increase friction I think for everybody is trying to sell anything.
On the other hand, I think we're clearly demonstrating that were counter cyclical and we have solutions that are very relevant to the problems that everyone's dealing with right now.
And we think that probably is helping us and weve been very quick to pivot you know we launched the covert shield quickstart tablets, which I think were great conversation starter is to get us and have a broader discussion about.
C M.
And you know the network effects continue to help as well I mean, you look at Yeah. We had New York State, We add New York City and in the Middle of everything that's going on there and those are state in the city employees are working around the clock to try to protect their people and I have a great deal respect for what they're doing and we're honored to be.
Able to support them.
And you know New York came back and said Hey can you can you also help us with our education Department ended up being into when we had in the quarter and we're really happy to do that and even when schools out so I think.
Net net I think a you know we're just getting we're very busy we're getting a lot of engagement and we're working harder than we've ever work and and the system is a producing at volumes that are much higher than we've ever had to produce out but you know this is why we built a scalable.
A cloud based system and it's working the way it's supposed to.
Perfect I appreciate the color. There then you Patrick on the once many acquisition.
It would be fair to consider their historical revenue, primarily as license based and they have any significant contracts in deferred that are coming over.
Yes, Hi, Ryan Thank you.
Once the many was an important strategic acquisition for us extending our population worn capability and we did not acquire them to drive near term revenue contribution, but rather for that longer term strategic potential. They historically had a revenue run rate of around $3 million to your point.
I mean.
Their business model with different it was largely on premise and really.
Their continued revenue would support maintenance, so which adds with other acquisitions.
For our accounting for one many the purchase accounting takes a huge bite out of whatever run rate. They had and that's why for 2020, we expect to see less than a million dollars contribution to everbridge, but of course, we're very excited about longer term potential as it cements our position as the leader and public one.
Perfect. Thanks for the color <unk> great quarter.
Yes.
Thank you. Thanks, we have a question from Brad Sills with Bank of America.
Great Hey, guys. Thanks for taking my question you had some nice wins in California. This quarter. It's in some instances there I guess my question is.
So what has been the relationship between states and cities I mean, obviously, you see some pull through effect.
But how correlated is that you would it stayed and then you expect to win some of these municipalities over time, how important is it for me just colleagues to be understand this do they interact offer with the state governments I'm just trying to think going forward what that would need for some of these newer state. Thank you.
Yeah I think it's there's no question. Thanks. Thank you for the question. There's no doubt I think it's proven that we talk about that network effect that when we went in the state overtime, we add the cities on the municipalities and and were able to grow that we saw in Florida very advanced stage.
Seen in Connecticut, we're seeing in New York, we're seeing in California, We're seeing an on countries. I mean, you know in Norway in Singapore and other places so.
Network effect isn't real moat around the business it allows us to grow and expand and extend.
And one of the things now, it's just sort of happening organically in the past and now we're putting together playbooks to say how can we accelerate that.
Thank you got it thanks to yeah. Thanks, then they want one more if I may. Please you mentioned some increased volume here due to cold. It is the use case changing here because it depends deck in other words are companies using your system to communicate more often with employees than than say in the past you know. This this is not just about critical event, but this is about right.
Regular communication as kind of the change there.
Yes.
Thank you.
And does that concludes your question.
Yes, that's it for me. Thank you Okay. Thank you Sir our next question comes from David Hynes with Canaccord.
Hey, Thanks, Gents congrats on the momentum.
So look I've, obviously, we've seen the big Tech companies are getting into contact tracing the economy restarts I I guess I'm curious.
How do you see the alerting side of this playing out is there an opportunity for Everbridge in there and then I get the flip side of that would be that does it make it you nervous at all the big guys like Google and Apple are now paying a lot more attention to location based alerting programs.
Yes.
Yeah, It's a great question.
As I said the awareness level has gone way up we're getting a lot of tailwinds as a result of you know the opportunity to leverage our capabilities to help our customers and it is attracting attention I think it validates the important is what we're doing it validates that this is a category that critical that management is a must have category as Jamie.
Saying and.
More often than not we're partnering with us companies and I think I think we sit in play really well with them. So it's something we monitor closely we're still the leader in this space by a lot. We have 550 million people protected by our platform and that's growing very rapidly.
So this is what you expect to happen as this is this category matures and gets bigger and it's a good thing.
Thank you.
Yeah.
And then Patrick.
As a follow what.
We might even do that there yeah, we might even add that you know.
Imitation is the most severe form of flattery, certainly when you and then the space as we did we invented we had the first.
Critical that management suite, we're not talking about just alerting there were talking about everything from the let's use the pandemic as an example, and.
Discussions or things like contact tracing contact tracing is a very specific technology typically going to be discussed as deployed on a mobile phone.
We're talking about the all the assets of a corporation from.
Their offices their branches their manufacturing plants their employees home locations for travel locations in understanding in a dynamic environment, where the virus isn't affecting or impacting those assets and then giving you the ability to trace backward.
It's as to John Smith went on a trip to Asia, because he had to meet some sales requirements unique came back and it turns out he's affected which offices, which branches, which meetings was even with the other employees. So that I can quickly.
Quarantine the individual.
Protect the other individuals that need to go to core Jade and importantly, keep my business running.
At the same time now without that broad scalable platform that David talked about no. One has an ability to do that comprehensively.
Our background did not only inventing and designing that full suite of tools enables the company not only to protect its employees during a pandemic, but after as they get you know in the process of going back to work. So yeah as David said Love. The fact that those people are saying they're going to build.
Pieces and parts of critical that management today, given our scale. The fact that were being deployed to to talk to keep safe almost two thirds of the U.S. population.
It is a form of flattery, but not a direct competitor.
Yes, that's very helpful color and look I don't think anyone's debating that you guys are the category are thought leaders in that space. Patrick maybe one quick follow up for you. The 194 net adds how many were Kobin shield and what's the ASP on those quickstart sales.
Yes. Thanks for the question, we don't breakout count of sales for an individual products is fairly except proceeding down but it was a robust.
Results for Q1, and 12 strong pipeline as we enter Q2 the asked the on those will vary.
Just like the breadth of our products. There is a there as a platform theme and them their volume based pricing on top of that overall they.
On average they were slightly below that Ah, yes, either reported for the trailing 12.
But there were there were certainly plenty that were above that well.
Okay.
Thanks, guys congrats.
Thank you.
Thank you. Our next question comes from Brian Peterson with Raymond James.
Hi, gentlemen, thanks for taking my question and congrats on a strong results. So just wanted to get some clarity on the guidance or one thing that you guys should there because it sounds like it was an assumption a that there may be some delayed implementation of large deals I can you expand on that a little bit I mean, obviously you guys you're doing more for a lot of customers. Then then giving.
I'm going to grow a giving him that are growing a rainstorm, but we're hearing about 24 hour sales cycles and millions of messages. So I'm just curious why customers why why wouldn't they want to get this up and running Asap.
Yes, thanks for the question Brian.
As David said, they're crosscurrents, we had.
I'm customers, who said can you. Please accelerate you blitz pull the sand and get it turned on quickly and we were able to achieve that we even had.
I had an inbound from one of our account managers regarding a large retail customer and I thought you know here. We go this is your.
Your comes to request for some sort of late payment, but instead, they were upgrading to CPM to help them manage proactively through their spending down of operations and then.
In time spinning them back up so.
He's had those tails, but then we've also had Ah you use the opposite where some customers are just overwhelmed even in some of the strongest segment everything overwhelmed in these early days of the code that situation. So as we sit here today, we just wanted to take a prudent.
Point of view, despite the very strong backlog that you can see on our balance sheet and despite a robust pipeline. We just want to take a prudent approach to guidance. We are raising for the year and we hope to continue to have strong performance. Because then you for each quarter throughout the year.
And and you know right. We also need to call out the simple fact that are in some of our larger transactions like population warning where we have.
Multi multi implementations some of those implementations are being impacted because we just can't go on premises. So a few of the acquired and primarily population warning, but a combination of those two categories or do take on premise implementations and we assume those will move forward rapidly.
The ones.
The nation gets back to work, but those were also impacted so it's a as Patrick said and David said, it's a balance of those mix together and that would cause us to be or natural conservative or as Patrick saying prudent selves when it comes to full guidance.
Understood. That's that's great color guys and maybe just one more for me Patrick I know that the the expenses or was that the linear already on EBITDA immigration isn't what we had expected any help on on how that's looking in the second quarter and and while it's going to ramp up in the back half of the year. Thanks guys.
Thank you yeah, we are maintaining our full year outlook for adjusted EBITDA could be an improvement year over year same with non-GAAP net loss.
So no change overall for the year in the near term we it with some of the has accelerated implementations with some of the additional volume where we anticipate that we will have a.
A bit more expense than we had originally intended for Q2, but that's okay. Because we've got to leverage to absorb that and get through the year with continued strong growth and continued improvement on the bottom line, which as you know it's very important for us to achieve.
Thanks much.
Thank you we have a question from Terry Tillman with Suntrust.
Hey is actually Nick on Rytary. Thanks for taking my question I just wonder if you got to talk about someone says that some of this success you've seen with respect sessions aside from one to many legacy for them. The I don't see acquisitions has performance so far but it had initial expectations for these are if you could provide any color around those.
Yeah, Hi, Thanks to the question this is Patrick.
Yeah for the tuck in acquisitions that we've done this year.
Too early well, we'll save that for and for which we acquired.
In the second half of 29 team that the strategic value of that is playing out in Spain.
When you look at the time, it's a comprehensive platform that starts with risk data and it needs to be actionable. There's a lot of data out there and it's very noisy and it's very impressed site, but before very uniquely is able to provide very unique very actionable data very geo precise.
And provides a lot of value to our customers and so as we got through the end of last year and through Q1 of of 2020, we've seen great uptake within our existing customer base as well as with with new logos, because we've been able to amplify there that the.
The Salesforce, that's bringing NP four data to market weve packaged it in with our full risk Intel solution. So we don't actually break it out or sell it standalone anymore and of course itself, including when we sell CPM. So I'd say that that the strategic value of that acquisition has been really strong.
Just as strong as we expected if not a little bit stronger environment.
And then I I would I would add to that that the you know that the two acquisitions. We completed early in the year. We're as you mentioned the Aiotv there sensors and.
Capability to connect the other digital devices within the company to understand Brincis, where people are in what locations meeting rooms, or things like that and coordinate all that information into the see a platform.
Because those are technology tuck ins and because they are in the the general markets of corporate and health care you can assume that those are for a they were you know there tuck ins or the non material and.
Substantial included in our guidance going into the year already but those aren't aren't knocking the ball park principally because they are involved in markets like health care, where things are shut down right now.
The one to many acquisition that David highlighted again in his comments.
Well this coal.
Remember that happened closer to the back half of the quarter and it's just now being integrated that's very strategic to our population warning platform. It combines the world's most recognized sell blood test solution with our stated the art or text space and location based or text and alerting solution and.
Sort of vacation.
And that's just starting now so that's that's the two little and too small to make a material difference in any way, but that's just a little bit of that color. So you can understand where we are with those things that as Patrick said.
I agree that NC fours by for a large one and the one that's had time now to perform an actual results.
Got it that's helpful. Thanks, guys.
Thank you.
Final question from will power with Bayer.
Great. Okay. Thanks for Oh, yeah, they need I guess, let me start with actually the follow up.
So it sounds like very good trends overall, even even in some of the harder hit areas, but I Wonder I guess, Patrick probably for you. If there's any quantification you could provide around any kind of dodd payment trends you might be seeing what's kind of contemplated a full year guidance on that front, what do you kind of somebody might happen in the back half of the year, particularly some of those targeted areas.
Thanks, Phil This is Patrick.
So oh, we have we do have customers in industries that are directly impacted transportation retail hospitals and health care, it's 10% of on revenue.
And welfare, none of them are accelerating new deals and up so a new order to manage through the operational impact of coded more effectively.
A very small number have already made request for financial flexibility.
We believe that.
As the most robust than most mailable platform with the broadest deepest technology that we're going to continue to represent significant value to customers and we haven't really well diversified book of business No single point of family failure on we've not had any customers at this point that are unable to make any payment. So it's.
It's a strong trends so far will but yeah.
At this is that we learned something new every day in the context endemic so we just want to.
And rather give you any specific quantification, but we just want to be prudent cautious.
And Ah and manage through the with with what we hope to be continued strong performance HM.
So oh, all declined to quantify anything specific there and and I'm just expect it will manage through.
Okay, Alright, and then they look very I want to ask about was the announcement on onto the voting.
[laughter] application and you know for monetary I'd, just add it sounds like a really unique and interesting opportunity and I guess, you know a kind of curious how much customization of any kind of what ended that and I guess b.
You know where the opportunity just to kind of you know I guess export that.
The other states, where you have relationships somebody that could be something that.
Could be in demand or elsewhere. So just wanted to go little more color on on that product.
Yeah, we're very excited about that use case, it's another high profile.
Client.
Hmm truck.
That folks can put into everbridge to manage through their most critical operation including voting.
And we do anticipate that that will be yes, a really strong value add as we work across other state wide opportunities with our existing state customers and with our existing state and local installed base.
That will make us that much stickier when folks are relying on our platform not just for messaging and managing risks, but to actually get the business up the legislature done. So we're excited or hopefully more to come on that.
Okay. Thank you.
Thank you.
I'll now turn the call back over to Patrick briefly for any closing comments or remarks.
Well thanks, everyone.
Thank you for joining our call today, while the world is going through a tragic event, we are proud that our technologies and creating value in helping people states and businesses running amid this global pandemic.
We remain well positioned to continue expanding our capability.
Sort of a growing number of customers worldwide and provide additional technology and data for our existing.
We look forward to speaking with you again soon including several upcoming virtual Investor Conference.
Thanks, again bye bye.
Thank you [noise].
[noise]. Thank you everyone for joining you may now disconnect.
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