Q1 2021 Everbridge Inc Earnings Call
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Good day and welcome to the ever Bridge incorporated first quarter 2021 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one.
One on your Touchtone phone and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Joshua Young Vice President of Investor Relations. Please go ahead Sir.
Thank you good afternoon, and welcome to ever Bridges earnings conference call for the first quarter of 2021.
My name is Joshua Young Vice President of Investor Relations for every bridge and with me on today's call are David Meredith CEO.
And Patrick Brickley, Senior Vice President and Chief Financial Officer.
After the market closed we issued our earnings release, which can be accessed on the Investor Relations section of our website at IR day ever Bridge Dotcom.
This call is being recorded and a replay and the teleconference will be available on our IR website at the conclusion of today's event.
During today's call, we will make forward looking statements regarding future events for the financial performance of the company that involve certain risks and uncertainties. The company's actual results may differ materially from the projections described and such statements.
Is that might cause such differences include but are not limited to those discussed and our forms 10-Q, and 10-K as well as other subsequent filings with the SEC.
The information provided on today's call reflects our perspective only as of today may 10, and should not be considered representative of our views as of any other subsequent date, we explicitly disclaim any obligation to update any forward looking statements or outlook.
Also during today's call, we will refer to certain non-GAAP financial measures.
Reconciliation of our GAAP and non-GAAP financial measures is included in our press release.
With that let me turn the call over to David for his prepared remarks David.
Thank you Joshua and thanks for all of you for joining us today.
We feel very excited about our first quarter results, which not only exceeded our guidance, but demonstrate continued positive momentum for our key long term growth strategies C E M and public warning.
During the quarter, we benefited from the Reacceleration of non COVID-19 related C E M and public warning use cases, while still expanding lifesaving vaccine distribution and back to work solutions.
Increased demand for both our <unk> and public warning platforms drove continued ASP gross that delivered the largest quarterly revenue beat and our history.
In fact Q1 represented our fourth record quarterly beat in a row and.
And our 18th consecutive quarter of outperformance as a public company.
Revenue in the quarter was $82 $2 million representing growth of 40% from the prior year. This despite the challenging comparison with last year's outstanding Q1 results.
Our strong revenue coupled with effective cost management produced a new high watermark for profitability and a first quarter with adjusted EBITDA of Atlanta and above the high end of our guidance at $5 $3 million.
Last quarter, we discussed the return of larger <unk> deals in the sales funnel as business has transitioned from lockdown mode to reopening mode and make plans to support the future of work and a new normal post vaccine distribution.
Accordingly, our Q1 performance reflects strong pipeline conversion, which included more than doubling the number of deals larger than a $5 million and increasing the number of $200000 plus deals by 60% from just one year ago.
This helped fuel several new high watermarks for ever bridge, including all time records for revenue.
Trailing 12 month average selling price or a S. P.
And are national revenue mix.
And operating cash flow, which was $19 $8 million for the quarter.
In addition to these records we also posted our best ever first quarter results for non-GAAP gross margin free cash flow and adjusted EBITDA.
Our long term gross strategy continues to drive our success through landing and then expanding deployments of our CGM platform and organizations as well as winning public warning solutions for governments.
<unk> gross.
<unk>, both from landing new customers from global geographies.
And vertical markets as well as selling additional solutions to existing customers.
We continue to expand the penetration of CGM by.
And the number of use cases, and extending our capabilities to additional departments within our customers' organizations.
For example, and the first quarter General Mills, a multinational marketer and manufacturer of branded foods became a new ever bridge customer by adopting C. M to automate threat identification organizational response, and visualize supply chain risk.
One of the world's largest intergovernmental organizations became a new vaccine distribution customer and the quarter.
And this customer selected our vaccine distribution software platform to help them manage the scheduling tracking and communications a vaccine immunization and administration for millions of doses across dozens of countries highlighting the scalability of our platform.
More and more frequently our market reputation enables us to engage with more senior leadership at large organizations.
Bolting and bigger deal sizes and increased standardization on ever bridge as part of the vendor consolidation strategy.
This strategy provides a single pane of glass across digital and physical threats, while also saving money for our customers.
Newsy and product features and capabilities announced and the first quarter combined with our recently closed acquisition of ex matters for.
Other support this approach.
And our first quarter. This strategy continued to drive greater market acceptance of our CGM platform as illustrated by larger wins increasingly these include seven figure deals.
On the public warning side of the business and Q1, we further expanded our presence in key markets and we announced two new public warning patents, including our latest for technology that focuses on hybrid and population alerting systems and intelligent sending messages and public mobile networks.
We have one customers and more countries than any of our competitors across every major region of the world.
When governments and carriers look for global and large scale referenced Apple accounts and public warning examples they select ever bridge.
During our most strategic and I'm, sorry, driving our most strategic growth engine, we saw customers deploy numerous new critical event management use cases, and all of our target markets and across the globe.
And we continue to push the technology boundaries as an innovator and pioneer and the E M space for new applications and use cases, and a post pandemic world.
This past quarter, we also announced the expansion of our industry, leading critical event management platform to provide the most comprehensive and integrated suite of digital and physical resiliency solutions for global organizations.
Customers can rapidly deploy RCM platform on a modular basis to support hundreds of positive ROI I use cases across five major categories.
The first category is C M for people and life safety, which fulfills the duty of care that and organization has for its customers remote and on site employees travelers and field workers.
Next is C M for operations and business continuity, which helps us which helps ensure our businesses can keep their operations running faster.
And then C E M for supply chain risk, which manages and optimizes supply chains and supply routes followed by C. M for smart and enterprise, which accelerated digital transformation through smart automation and secure Iot management, Big data and advanced analytics, and finally see and for.
And where our solutions protect and organizations brand and reputation while providing resiliency for it systems and cyber security and and increasingly virtual world.
Demand for these C and implementations as well as our demonstrated domain expertise and leadership drove numerous wins and expansions and the quarter, including Kimberly Clark.
A leading manufacturer of paper based consumer products became a new <unk> customer as part of their effort to fulfill a duty of care to employees with initial emphasis on post pandemic business travel.
T mobile one of the largest mobile carriers and North America signed a significant expansion deal by adopting C M to establish and enterprise wide threat and incident dashboard.
A few other examples from Q1 include Rico USA that followed the lead of their counterpart in the U K to become a new <unk> customer.
<unk> will be leveraging our risk intelligence and mass notification capabilities to establish a robust threat assessment tool paired with a communication platform to accelerate their security strategy.
Dentsu International a global advertising and digital marketing company also expanded their relationship with Everbright <unk> to protect their 46000 employees from the impact of COVID-19 by leveraging and risk intelligence and internal collaboration tools to automate and streamline incident response.
Turning to examples of other meaningful wins, you may be aware that evergreen and serves dozens of native American and first nation tribes across North America.
And Q1, our win with the Muskogee Creek Nation Health system of Oklahoma expanded their relationship with ever bridge by selecting our vaccine distribution solution to more efficiently coordinate and administer the COVID-19 vaccine to its tribal members.
The Muskogee Creek nation, which is the fourth largest native American tribes and the country chose ever bridge to automate the registration scheduling administration, and tracking and reporting and vaccinations among its more than 90000 and citizens and the Tulsa area.
In addition, citizens bank, a leading bank and the northeastern United States with over 1000 branches added safety connection pro and order to drive a quantifiable improvement and operational efficiency.
And the federal government space, we continue to advance ever bridges position as the leading CDN provider by achieving more fed ramp authority to operate certifications or acos for short for our solutions than any of our competitors and the first quarter. We grew our relationship with the U S Army as well as.
And our relationships with both the U S Air Force and the U S Navy.
During the quarter, we signed a meaningful contract expansion with the U S. Army's Jarvis program.
As many of you may recall, the joint analytics real time virtual information sharing system or Jarvis represents one of our largest customers overall and and anchor customer for our federal program.
Jarvis primarily focuses on anti terrorism and other security threats, such as active shooters and natural disasters that might affect D. O D operations.
Since the outbreak of COVID-19, Jarvis has also been supporting ongoing threat analysis of the pandemic given the army commanders and other Dod users critical insight into the impact of COVID-19 on global operations across 400 military locations and 70 countries.
Our expanded agreement extends this program beyond the U S. Army to now include support for the Air Force as well.
Our federal activity and the quarter also included a significant expansion of business with the U S. Navy growing our combined business with another military branch to over seven figures.
Turning back to the enterprise business, we delivered a strong customer ROI with our cm supply chain implementation and the medical market decks com, a leading manufacturer of continuous glucose monitoring systems shows ever bridge to mitigate the impact of supply chain risks on their global operations.
Our Q1 results also demonstrate renewed activity and markets negatively impacted by COVID-19, such as the return of health care purchases for.
For example to support their it systems readiness, New York City health and hospitals expand either it alerting capabilities, while maintaining secure HIPAA compliant communications.
And other health Care example, from Q1 was Alexia on a global biopharmaceutical company, who expanded their use of IP alerting.
And speaking of IC alerting.
We continue to expand our support for next generation enterprise wide digital and physical fusion centers. For example, our just closed acquisition of ex matters will help accelerate digital transformation across service operations Cyber security and Dev Ops incident response and in any.
<unk> digital world with dramatically more remote employees, the rapid expansion and interconnected devices and systems and rising instances of damaging cyber attacks.
And I see organizations for large enterprises and governments are under more pressure than ever to accelerate their digital transformation, while providing solutions for it resiliency and uptime.
By combining forces with ex matters. We believe every British can help organizations discover it issues more quickly assemble responders apply remediation code managed patches and drive continuous improvement with analytics and significantly increasing and organizations ability.
And to recover from a critical digital events to keep their businesses running faster.
In fact this combination further strengthens the industry's most compelling end to end <unk> platform to identify assess and manage critical events that can impact and organizations digital and physical assets.
Together our capabilities provide the most compelling.
And cyber security solutions for <unk> at the largest fortune 500 enterprises.
Turning to our metrics for the quarter.
Our performance clearly reflects the result of our land and expand strategy with large new customer wins multi product expansions and continuing demand for higher ASP products, particularly our <unk> solutions.
We added 135, net new enterprise customers and the first quarter slightly above our target range of 110 to 125, increasing our total enterprise customer count to 5748.
11 customers selected our expanded to see and raising the total number of <unk> customers to 139, a 62% increase and the number of <unk> customers from a year ago.
While this demonstrates excellent momentum it also highlights our significant opportunity for continued expansion and existing customers.
And then in the fourth quarter, our momentum with large transactions continued in Q1 with quarterly Asp's there were over $100000 again.
This produced an increase and our trailing 12 month ASP metric to $86500 and the first quarter a new record.
Contributing to this ASP growth, we closed 45 deals valued at more than $100000 per year, a high watermark for our first quarter, including a record number of deals that were valued at more than $500000 per year more than doubling the number of deals greater than a half a million dollars from the prior year period.
Yeah.
From a product mix perspective, a record 66% of new and gross sales over the last four quarters came from new products, reflecting high demand for our newer applications as well as continued appetite for our core products.
Our international business also continued to post strong growth results in Q1 with 30% of total revenue coming from outside the U S compared to 20% a year ago, representing a record high mix of international revenue.
New customers that led this growth included the vaccine distribution program I already mentioned one of the largest real estate projects and Riyadh, Saudi Arabia, as well as a 100 acre city within a city campus and Southeast Asia.
Our revenue mix by vertical was relatively consistent with 63% from corporate 26 per cent from local state and country wide government and 11% from health care, reflecting growth across all of our target markets.
As always we remind you that quarterly metrics can fluctuate, but that the longer term trends continue to reflect our overall business momentum.
These outstanding metrics demonstrate the growing market acceptance of our overall <unk> strategy as well as our ability to close larger transactions from our pipeline as organizations increasingly embraced P. M to address a multitude of high ROI used cases.
Consistent with our mission to keep people safe and organizations running faster global impact investors increasingly recognized ever bridge as an organization that utilizes our technology platform to address some of the most challenging issues of the day in order to help make the world a better place.
Our mission driven organization also earned and recent recognition across several categories, including best outlook Best place to work best sales teams and best Global culture.
And a competitive technology market, our culture and reputation and enable us to continue to attract strong talent.
Now turning to the future later this month, we will continue on our road to recovery series of executives thought leadership symposia, which draw audiences from a wide range of industries and markets from around the world.
Please join us on May 26, and May 27th.
And as Bill Clinton, the 42nd President of the United States Keynotes, Our first summit in 2021, Bill Clinton and will be joined by numerous additional global leaders luminaries and experts, including former Secretary of state Madeleine Albright and Steve Forbes, Chairman and interim Chief of Forbes media.
Also presenting our Doctor Judy Monroe.
Chief Executive Officer for the centers for disease Control Foundation and Dr. Jay Butler, CDC Deputy director for infectious diseases. Additionally.
Additionally, senior sports executives from the NBA Major League Baseball The Olympics and Premier League football or as we say in the United States Soccer will share their insights on the future of sports and a post pandemic world.
With the participation of C suite executives from Fortune 500 companies and board of Directors. This summit promises to be and illuminating event, which we look forward to sharing with you.
In summary, we started off the year with an exceptional first quarter results.
During 2021, and we will build on our success and advancing our <unk> and public warning solutions to enable organizations around the world to keep people safe and their operations running we're proud of our accomplishments and believe the best is yet to come as we continue to penetrate and serve a multibillion dollar market.
Now I'll turn the call over to Patrick for more details on our first quarter financial performance and our guidance for Q2 and the full year 2021, Patrick.
Thanks, David.
We've begun the year on a high note with record revenue of $82 $2 million and increase of 40% from a year ago and.
And exceeding the high end of our guidance range by more than ever before.
This growth was driven primarily by strong subscription revenue that increased by more than 30% both year over year and on a trailing 12 month basis as.
And as well as certain projects that achieve implementation success and the quarter.
Our net revenue retention rate continues to track well above 110%.
And consistently strong customer satisfaction combined with demand for additional air bridge technology at existing customers.
Looking at the details of our P&L 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 and the earnings release, we issued earlier today.
Gross margin was 73, 6% and increase of 680 basis points from last year as we continue to benefit from greater scale.
Total operating expenses and the quarter were $58 $2 million and increase of 25 per cent from year ago.
Slept and continued investments and our platform and our go to market strategy.
Adjusted EBITDA was $5 $3 million well above the high end of our guidance range and reflected the revenue upside and the quarter.
This represents a meaningful increase from our adjusted EBITDA loss of negative $4 $8 million and the year ago quarter.
Net income and the first quarter was $8 million or <unk> 18 cents per diluted share.
Compared to last year's loss of $5 $5 million or negative <unk> 16 per share.
On a GAAP basis, our net loss was $21 $8 million.
Looking at our balance sheet, we ended the quarter with $743 $2 million and cash cash equivalents restricted cash and short term investments.
And increased from $475 $6 million at the end of the fourth quarter.
Reflecting the net proceeds from our zero percent convertible debt financing, partially offset by a repayment of our one five per cent convertible notes during the quarter.
Cash balances at the end of the quarter also benefited from record operating cash flows of $19 $8 million and free cash flow.
$15 $5 million.
Which was just shy of our record fourth quarter performance.
Note that our cash balances at the end of the quarter do not include the cash impact of our acquisition of ex matters, which closed this past Friday and totaled $165 million net of cash acquired.
Total deferred revenue was $184 $5 million at the end of the quarter.
And increase of 27 per cent from year ago.
As we know every quarter, 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.
And that's such a change in deferred revenue in any given quarter is not an accurate indicator of the underlying momentum and our business.
We believe our trailing 12 month performance is much more indicative of our overall business trends and that our longer term performance continues to support our growth objectives and.
In addition, we continue to have an eight figure backlog of contracts that are signed but not yet invoiced and whose revenue will be recognized in upcoming quarters.
Now I'll turn to our guidance for the second quarter and full year.
Our updated guidance for 2020, one considers the impact of our acquisition of ex matters.
Having just completed the transaction on Friday.
And the patients for the financial contribution from ex matters for the remainder of the year have not changed from the view, we provided about a month ago.
Similarly, we remain positive about expanding our ability to help customers manage both digital and physical threats to the people organizations and operations and are on.
Optimistic that ex matters will help support our long term ambitions.
For the second quarter, we anticipate revenue of between $83, seven and $84 1 million representing growth of 28% to 29%.
We anticipate adjusted EBITDA to be between negative 5.2, and $4 $8 million.
We anticipate a non-GAAP net loss.
Of between eight eight and $8 $4 million or a loss of between negative 23, and 22 per share based on $37 6 million basic and diluted weighted average shares outstanding.
Stock based compensation expense is expected to be approximately $16 $7 million for the second quarter.
For the full year, we now expect revenue to be and the range of 358 to $359 $6 million representing growth of 32% to 33%.
We anticipate adjusted EBITDA will be on the range of 7.9 to $8 $7 million.
We expect and non-GAAP net loss of between 7.4, and $5 $8 million or between negative <unk> 20, and 16 cents per share based on $37 3 million basic and diluted weighted average shares outstanding.
This guidance assumes estimated stock based compensation expense is up approximately $66 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, we're off to a great start in 2020, one with results that well exceeded our expectations and strong momentum setting us up for an excellent year.
Our acquisition of ex matters advances our position as a leading provider of enterprise scale digital and physical resiliency solutions.
And we remain optimistic that we can continue to penetrate the multibillion dollar opportunity we are addressing and the years ahead.
Now operator, we'd like to open the call for questions.
Thank you we will now begin the question and answer session.
Ask a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys.
Withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Okay.
Yeah.
Yes.
Yeah.
Okay.
And the first question will come from Sterling of Utah with J P. Morgan. Please go ahead.
Yeah, Thanks, guys Sterling Auty from JP Morgan.
Just actually want to start more of a housekeeping and want to make sure I understand the guide for the full year can you remind us more specifically what was the expectation.
And that you gave about a month ago for ex matters.
Cause if I take the B and kind of added to kind of the midpoint. What you had it looks like you're including about $9 million for ex matters is that the right way to think about it and that the guidance was really.
Taking the beat flowing it through to the full year, and then adding ex matters to it.
Hey, Sterling. Thanks for the question. This is David we did have a little bit and pull forward and the quarter.
Things that came in a little early but I'll, let Patrick speak to that Patrick do you want go out and do the full answer.
Yeah sure.
And so as David said, we could have a little bit of pull in our guidance for Q2 and for the full year and what we're doing as is and what we're factoring and uncertainties that impact both revenue and profitability.
And and we were happy to see implementation success and certain public warning projects are the results and some additional revenue in Q1, but really.
The strength of Q1, and what we're excited about for the rest of the year reflects a reacceleration of non COVID-19 related and.
Public warning activity.
And the increasing number of large deals that you saw.
And and.
And in fact subscription revenue grew more than 30% both and she ran on a trailing 12 month basis and.
And our current RPE L grew 34%.
So these on top of the.
The existing backlog, which I referenced of signed but not yet and voice the contracts.
Which is still measured and the mid teens of millions of dollars and which we hope to recognized revenue on for upcoming quarters. These gave us a lot of momentum.
As we look out towards the rest of the year.
But you know as usual.
And on guidance as we've been doing for the past many quarters now and we're just we're trying to provide a prudent outlook and.
And we hope for being able to continue our track record of outperforming expectations.
That makes that makes a lot of sense and then one follow up you talked about over 60% of the business coming from new products over the last 12 months and you gave some anecdotal.
Examples, but when you look at it as a whole which of the new products are making up the biggest portions of that or is it very evenly diversified.
Yeah. Thanks, Sterling I mean, we really had strength across our product portfolio. I think we did mention for example, our it alerting was one of our faster growing segments and that's one of the reasons why we're so excited about completing the ex matters acquisition because it really ex matters has been the leader.
And the enterprise play for that space and we've been focused on the enterprise and last for five years since we launched that product. So putting those two together I think squarely positions us as the leader. If you are a fortune 500 company looking for an enterprise class solution and that space. So that's an area that that definitely stuck out and and I think we talked.
About that earlier with the announcement of the acquisition.
Got it thank you.
The next question will come from Matt Stotler with William Blair. Please go ahead.
Hey, guys. Thank you for taking my questions I guess I'll just start off with kind of one on the broader M&A front and you obviously know congrats on the ex matters acquisition.
A bunch of other ones here this year it seems like.
On one hand, M&A has always been a core part of Enbridge product strategy right I think historically, it's been kind of low 30% organic growth and a few points from acquisitions and it seems like the appetite.
Definitely has picked up on both a frequency and size perspective, some love to understand kind of the factors that are driving this adjustment strategy are you obviously always.
And looking at where the puck is going and for multiple years down the road, but and I'm just kind of a temporary dislocations around COVID-19 and and just being opportunistic or is this more of a permanent shift relative to what we used to historically.
Yeah, Hey, Matt Thanks for the question.
No.
M&A has always been part of the strategy for ever bridge and.
And I think Jamie always talked about you know something and a mid to high single digit of the growth rate coming from acquisition and the rest coming from non.
And non acquisition.
And what really drives as decisions are for strategic fit other products. If you look at one day money that was an area, where we were the leader and location based SMS.
And we really felt like we could transform that industry by having a hybrid solution and we could do cell broadcast for location based SMS. So acquiring a leader and cell broadcast just makes sense I think similarly with ex matters.
Seeing that and were.
So and even over the weekend a lot of media around cyber attacks and you know just.
And the need for an enterprise to be secure on the digital side with all the digital transformation employees being remote and future of work and the opportunity to take the grid and where we're seeing on the ICA side and put it with the leader on enterprise I T E and we feel it's very strong because when you put the digital C and for digital along with physical.
And we can really own the fusion center for the enterprise, where they can have one single pane of glass and look across all their digital and physical risks and so we think that wasn't really compelling strategic fit from a product roadmap perspective, and that's why we did it so.
And thank the strategy has really changed from what what Jamie was doing for years, which is.
No targeted.
Tuck ins that allow us to strengthen our accelerate our technology roadmap or to help us get into geographies, particularly internationally and that we're not in currently so we don't really see it as a big strategy shifts I think.
A lot of large numbers applies as we get bigger you know.
And the percentage.
And the numbers will look bigger, but we don't view it as a strategy shift.
Got it got it and okay. That's helpful.
And then maybe just one on on the partner channel.
And an update on the upfront specifically, maybe you know how much the business at this point is being influenced by partners and how.
And that pipeline is shaping up for additional partnerships I know that.
Still relatively new but obviously, some exciting opportunities with soliris and and the expanded relationship Athos and we'd love to also you know any any examples of you know additional situations like California, where you're seeing partners with pulling you into new opportunities that would be helpful. As well. Thank you.
Yeah, great. So we've talked a lot about partners, we don't break it out right now, but I can tell you that we did exceed our internal targets for the quarter on our partner bookings. So we're pleased with that and we were getting more leads coming in from partners and we've ever had and the history and the company.
We've got some pretty exciting partnerships and that.
It will.
Probably be announcing later this year and then we've already earlier talked about partners like artists who've made a multiyear and multimillion dollar minimum commitment to sell more of our stuff on a global basis and Thats like you mentioned caliber yes isn't a great. Great example, where we had success with them and California first and now.
We've expanded the relationship and and.
And they've made a commitment and other.
Other types of partners like north on controls where.
And they've also made a similar.
Minimum commitment going forward and it's a really good fit for people that want on turnkey outsource the whole operation and they can provide the bodies and we provide the technology and and one of our big fee and Fortune 500 deals.
And we've announced previously actually came from that partnership.
So we're getting a lot of traction and and then other partners like control risks and we've been working with for a while we were thought leaders on a global basis around risk management into the C suite and they're very much and professional services led organization and so it's very synergistic.
Stick, where they can pull and our technology platform and it just works well for them and it works well for us. So I think we're getting you know we've done a lot of foundational building over the last year.
And better partner portal better tools better processes more awareness building out a partner marketing organization and all of that starting to kick in now. So I think we expect to continue to see more growth and more success in that space.
That's helpful. Thanks again, thank you.
The next question will come from Scott Berg with Needham and company. Please go ahead.
Hey, David and Patrick Congrats on a good quarter and thanks for taking my questions.
David I guess I'd like to start off on the Jarvis extension.
As you mentioned was one of your or has been one of your largest customers can you help us understand what's in this contract is it more modules you know it looks like you're probably extending the functionality into a couple of other units within the within the armed services, but any any color there would be helpful. Thank you.
Yes, Thanks, Scott I. Appreciate the question, we're very excited about this expansion and this is a really good example, where you know that the power of our platform. It lends itself for so many different use case and so originally and Jarvis started this anti terrorism and physical safety and.
And when COVID-19 came on and we're able to pivot and and they were able to leverage that platform to help with COVID-19 as well and so now we are as we've been wanting to do and are really excited to be extending that platform to help different parts of the air Force and we see opportunity for continued growth across the department of defense.
And then getting a multi year.
Ex extension as well as there's always additional things that they want to use the platform for and.
And on enhancements and things that they that.
And they ask for that and we continue to do for them. So overall, it's just it's just a great great news and we're very excited about it and it's a big important customer for us with a lot of headroom to continue to grow across the D O D.
Excellent and then from a follow up perspective, I wanted to ask Sterling's question and a slightly different manner. I guess, if you look at your pipeline and activity sales pipeline today.
And I've just talked about deal for accelerating for non COVID-19.
Related functionality, but if you look at that pipeline and going out. The next couple of three or four months relative to what you saw and maybe the year time before the pandemic does that composition differ at all just trying to understand if your customers' priorities. Maybe you have changed at all over the last 12 to 18 months.
Okay.
Well, yes. Thank you the what we're seeing now is people are starting to focus on.
They're sort of post vaccine distribution for.
The future of work and how do we go forward and that's really exciting for us because if you look at the three quarters before COVID-19 kicked in and I think we posted.
Mid 50% billings growth as three quarters, So we were getting.
And on a momentum and there are a lot of use cases that we're used to selling and that really we didn't sell as much during COVID-19. So we're starting to see those use cases coming back.
And so you know our sales team loves that for example, and travel risk management and people are starting to travel again, and we mentioned a few examples of deals that were you know catalyzed by you know wanting to cover travel.
Health care is one where you know and then in the midst of COVID-19.
A lot of the health care entities, we're not in a position to be buying new software. They were just dealing with.
The crisis at hand, and now they're able to start to come back and were seeing those deals and that funnel and start to come back. So so we're really excited about getting back to some of the use cases that we have and the general awareness has risen about why CMS is on.
Must have not a nice to have so we think that awareness is going to stick around with the board and the CEO and the C suite.
But now some of the use cases that we really are good at selling.
We're gonna be turned back on and we're starting to see that happen and we're starting to see that and the funnel. So we're really excited as.
As we exit Q1.
Great Congrats again.
Yeah.
Again, if you need to ask a question. Please press Star then one our next question will come from Brian Peterson with Raymond James. Please go ahead.
Great. Thank you this is Alex sklar on for Brian.
And David and Patrick one question on the international growth I know the countrywide deals and are the probably the biggest opportunity, but and rational revenue accelerated again this quarter to over 100% growth I'm. Just curious if you could talk about what's driving that and would that any traction you're seeing on the corporate side internationally. Thanks.
Patrick do you want to take that one.
And we've been diligently building out our international go to market expansion for the past few years on a number of years ago, our percentage of revenue from outside of the United States was and the single digits and right now we're approaching a third and then and we think it could be for two thirds.
And even more of our revenue.
We've been investing a lot in the European region, not just for public warning opportunity with the EU, but last year, we did a formal launch of <unk> and EMEA and we've got.
Office, and the Middle East, where we've been landing a lot of large deals and and now we're seeding APAC. So yeah.
On the one he and it's very early days per year.
And we're proud of the success that we've had the day.
We anticipate that you will see continued success going forward.
It's because it's early and I don't know that it'll be linear and might bounce around a bit but we think that the trend will remain up into the right for for a long time.
Okay, Great and Patrick one more for you following up on on Sterling guidance question, but on the profitability side and really nice EBITDA beat this quarter. So the <unk> guide and looks like a fairly sizeable move can you just help parse out the impact from the acquisition and and the deferred revenue haircut versus just increase and growth investments.
Yeah.
Well, it's hard to do we just closed the deal last Friday, we're certainly giving ourselves a wide berth here.
And the first quarter post acquisition.
On the bottom line and but you did see that for the full year, we we raised a little bit and we do think that net net this acquisition is going to be accretive.
Squarely accretive to adjusted EBITDA and 2022 so.
We just want to be prudent as we.
Put.
On the acquired company's financials through public accounting and but we're optimistic that we're going to do this year. What we said we were going to do which is continue to make incremental improvements on the bottom line, whether that's adjusted EBITDA non-GAAP net income or.
Free cash flow and we anticipate gradual improvement versus last year, despite any purchase accounting impact from this acquisition.
Alright, great. Thank you.
You bet.
The next question will come from will power with Baird. Please go ahead.
Okay, great. Thanks for taking the question.
Just wanted to ask on population alerting.
Press release, you alluded to and expanding presence and in APAC and Wonder if you could just kind of speak towards the pipeline of opportunities Youre seeing within population alerting there and then I guess likewise, just any kind of update.
On the European opportunity and what are you seeing in terms of you know RFID RFP activity. What do you think we might start to get some announcements was that.
And this year is that into 2022 and he any update there would be great.
Yeah, well thanks for the question, we're very excited about the public warning opportunity.
We've got a pretty aggressive outreach all across the globe and we're engaged and a lot of discussions currently are in terms of the quarter. We had some significant milestones on on some of the projects. We've got going we had some expansion opportunities and.
We're engaged in and various RFID and Rfps and one of the big things, we're seeing and I think it's really good we've talked a lot about the front end and the back end of these deals the front end and being so until the government and then the back on us.
You sell the back and so all the wireless carriers and the market and that gives you an opportunity to potentially double or triple the total opportunity size and a region. So what we're seeing is the ability now for us to go in and sell to the carriers, sometimes even ahead of the government.
Or give us an opportunity if the government is not ready we can still do something with the carriers. So we're seeing a really good mix of final a final activity.
On the carrier side as well and I think that's also really good that we have the ability to do both cell broadcast and location based SMS because in some cases you've got.
Customers that have won and theyre thinking they want the other or they want a hybrid solution and our ability to play and both those spaces with the leading solution serves us very well so.
And we don't have any.
Other announcements to make at this time in terms of specific countries, but but overall, we like the progress we're seeing.
Okay, and if I could just maybe a follow up quickly.
On the other comments.
Question is with respect to Jarvis.
And you alluded to working with the U S. Air Force is that something that could be the same size as what you were doing with army or are you just kind of getting started there and any further kind of color about that.
And the opportunity there.
Yeah. Thank you for the question and we're just getting started there so.
And this is our entry into it with with parts of the Air Force, but it is not as comprehensive as our current.
On the current maturity level, we're at with it with the army. So there's there's still room to do more there.
Okay, great. Thanks sure.
The next question will come from Terry Tillman with true Securities. Please go ahead.
Yeah. Thanks for taking my questions, Hi, David and Patrick.
And congrats on the quarter and the ex matters acquisition, maybe David for you. The first question just relates to you know with ex matters not having it on your portfolio and a stronger and I T alerting or kind of a digital approach strategy. What does this do where maybe you don't like when you're involved in a fusion center opportunity or a big C. M deal. How often was you know the I T.
Alerting side coming up and maybe you didnt have enough strength and.
Capabilities, there and so this is going to shore that up I'm kind of curious what this can do on even accelerating further C M wins and the infusion center initiatives.
Yes, Terry Thank you very much it definitely is extremely relevant to what we're doing and see them and we talk about <unk> for digital and that really is it.
Ciber and.
And when you think about the internet of things Youre going to have 75 billion devices on the internet with IP address so you're exponentially increasing the threat surface. There you know post COVID-19 you got more people working remotely so it just.
Our customers are telling us they want a single pane of glass for any risk, whether it's digital or physical and I. Just don't think there's anybody else and the industry that can do what we can do now for that so it's a very powerful strategic combination and I think our customers, so far and feedbacks coming in and very strong and we're excited.
As far as what what they bring versus what we have I think there's definitely capabilities there.
And that are complementary and so.
So just you know as Patrick mentioned, we literally just closed the deal Friday today is Monday. So it's it's one business day later, so we had.
We had a Hart Scott rodino so.
There are things, we couldn't get into and now now we're able to really get into it. So.
We'll be more into the specific details, but I do think.
They've always focused on the enterprise and that's really been their space. We've been focused on the enterprise. So I think when you put the two together.
You've really got the default choice for and enterprise buyer.
Yep sounds good and I guess, Patrick in terms of the four quarters straight quarters of of record beat or increasing size of beat could you remind us again in terms of stock ranking is it a certain products or skus that theres, just more variability and or maybe it's just been and not the non COVID-19 related.
And that you've just been more conservative around and and there has anything changed on your outlook going forward. Thank you.
Hey, Terry well, we just continue to remain prudent we're really excited about the back half for the year given the momentum that we're exiting Q1 with and entering Q2 with.
As I mentioned earlier, there we did pull from revenue forward into Q1 and.
We do have we do have some one time revenue and.
And our quarterly revenue and.
And.
And sometimes that's a little bit harder to predict but it's generally share any material to results.
Les and.
One per cent and in any given quarter and.
And if.
That's the case.
Oh I'm sorry.
Usually around two or 3% excuse me in any given quarter.
And this quarter was a little bit more than that and that was about half would be.
The the beat.
It was a couple of million dollars of incremental one time revenue.
And related to delivery, but and.
Going back to that backlog that we've mentioned.
Of.
Deals that we've signed.
And are on schedule for delivery and the upcoming quarters, but we have not yet invoiced and these are things that are not and our deferred revenue.
Harder to see them coming and sometimes for delivery for us is isn't entirely predictable, but we're excited about and Q1, we got a number of those projects across the line and we hope to day look continue to do that for the next many quarters.
Yeah.
The next question will come from Koji Ikeda with Bank of America. Please go ahead.
Hey, David and Patrick Congrats on the nice quarter and thank you for taking my questions I have another question on ex matters for you. It sounds like it's very relevant with your deal your deal flow out there, but I'm just kind of wondering is is the buyer. The same for ex matters is it would it be for your CGM products and and.
And if it is or even if it's not you know does this change your go to market go to market motion at all.
Yeah. Thanks for the question and by the way I, just want to point out too I know.
On the Asps that we.
We did hit an all time record high this quarter on our ASP and wanted to make sure that.
You guys noted that as well.
On the buyer and it's a great question because what's happening now is the audit committee of the board of directors is being expected to.
Keep an eye on all forms of risk and not just financial risk. So there's board level of awareness of this I think coming out of COVID-19 and then you've got different personas within the C suite that we deal with so physical threats, we're dealing with the Chief Security officer for our it alerting.
For for ITE for cyber and we're dealing with the CIO, sometimes now and empowered CTO.
Digital Officer C. So for the future.
The future of work Youre dealing with the chief Human Resources officer, sometimes even chief legal and some of these things with these COVID-19 steering committees that we're seeing so there's multiple different personas and the C suite that we deal with and each one has different use cases that they're focused on but definitely we like the fact that.
Ex matters really strengthens our positioning with some of the better funded personas and like the CIO like the CTO and so when we can say look we've got one platform to support your entire enterprise across all digital and physical risks and remediation.
Different parts of that were spot on with different people, but we definitely felt we need to be very strong on the IP piece, given where the industry is going with digital transformation and we think this really puts us there.
Got it got it and that's Super helpful and just one follow up for me on ex matters to thinking.
And thinking about the contribution for this year, that's somewhere in the $9 million to $11 million I guess, how much revenue from a high level. It was coming international from them and just another buyer mindset question internationally given the great performance that you you had and this first quarter and and accelerating revenue there I guess, how do we think about the buyer's mindset inter.
And actually for a product like ex matters. Thank you.
Yes, Patrick do you want to and you wouldn't take that one.
Yeah, we.
Thanks, Koji and it's great to hear on the call.
The.
The mix of domestic international.
It's a little bit lower in terms of international as a percentage of total for ex matters, but that being said one of the.
Elements of the strategic rationale for the acquisition was to.
You are at least and our experience and seem to have very good <unk>.
And recognition outside of the United States and buyers know at the ex matters, our value proposition and they like it and they appreciate it and that's.
And that's been part of the ex matters and ability to grow for the past few years.
That's a given that international expansion and such an important part of.
Of our growth story for years to come that was yet one more reason why we were attracted to to that team and the offering and the opportunity to pull that into the sea and sweep.
And bring that.
And to buyers outside of the U S and and in fact buyers outside of the U S who are looking ex matters bring them the EM suite now.
Got it got it thanks for taking my question guys I appreciate it.
Yeah. Thanks, guys.
The next question will come from Sterling Auty with J P. Morgan. Please go ahead.
Yes, Thanks, just a follow up.
We're in such a.
A volatile market, where everything is under heightened scrutiny. So I want to make sure we're clear.
You said half of the upside came from upfront revenue, but I want to make sure is that completely exclusive of the pull forward. So was the pull forward something separate or were they.
Part of the same thing and could you quantify the pull forward.
If you could.
Patrick you want to jump on that.
Yeah look we're going to try not to get.
On too precise here at Q1, and I mean, like I said, we usually do a couple of percentage points of.
Of one time revenue and AR and.
And the last.
Q3, and Q4 of last year that was 4%.
And in this quarter that was 7%.
And that incremental portion of it has.
Yeah.
And that was pulled forward and that's upside for the year that that's going on.
That's it.
And I would really simple.
Keep them out.
And of course, it's too much especially.
And thinking about.
The impact on the rest of the year like I said for guidance for the rest of the year on one hand.
And we're trying to be very prudent.
This acquisition that Jeff.
And we've got deals that we're competing.
On that we need to work through on.
On the other hand, we have.
Got the description revenue growth of one and 40% P O formal P O which was 134%.
And why a S. T. We're seeing a reacceleration of non COVID-19 related opportunities.
And we're really excited about the rest of the deal and we hope that we're setting expectations that we will be able to outperform just like we have a football and some quarters.
Excellent. Thank you.
This concludes our question and answer session I would like to turn the conference back over to David Meredith for any closing remarks. Please go ahead Sir.
Thank you for joining our call today, we're very excited about our strong start to 2021 as we benefit from a reacceleration of non COVID-19 related C M and public warning use cases with our acquisition of ex matters now complete we are further strengthening our solutions for digital and physical security as more and more.
For customers choose ever bridge with the most proven and scalable and reliable solution on the market. We are well positioned to continue penetrating a multibillion dollar opportunity to drive increasing value for all of our stakeholders.
We look forward and meeting with those of you who will be attending the Jpmorgan and bank of America conferences in the coming weeks and and other events in the meantime, Thank you for your interest and good night.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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