Q2 2021 Everbridge Inc Earnings Call
Good day and welcome to the Upper Bridge second quarter earnings Conference call.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then 1 on your Touchtone phone.
Your question. Please press Star then 2 please.
Please note that this event is being recorded I would now like to turn the conference over to Joshua Young. Please go ahead.
Thank you Tom Good afternoon, and welcome to ever Bridges earnings conference call for the second 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 close we issued our earnings release, which can be accessed on the Investor Relations section of our website at IR day ever Bridge Dot Com. This call is being recorded and a replay of 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 or the financial performance of the company that involve certain risks and uncertainties. The company's actual results may differ materially from the projections described in such statements factors that the factors that might cause such differences include but are not limited to those discussed on our.
Forms 10-Q, and 10-K as well as other subsequent filings with the SEC information provided on today's call reflects our perspective only as of today August 9.
And should not be considered representative of our views of any 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 a reconciliation of our GAAP to non-GAAP financial measures is included in our press release.
With that let me turn the call over to David for our prepared remarks David.
Thank you Joshua and thanks to all of you for joining us today.
We delivered excellent second quarter results building off the strong momentum that we established in the first quarter.
Both revenue and profitability exceeded our guidance and we achieved a record of.
A number of new records that reflect growing demand for our <unk> suite.
And our public warning solutions.
The Covid pandemic brought the concept of enterprise resilience.
Into the lexicon of executive board rooms around the world.
And it continues to raise the priority of critical event management for companies governments and other organizations.
Years ago, we saw the need to manage a globally distributed workforce and that's why we created our travel and remote worker solution safety connection and made it a cornerstone of our C suite.
Today organizations are finding that safety connection is perfectly suited to serve them as companies adopt work from wherever you are and hybrid work location policies.
Our next frontier of innovation responds to the increasingly blurred line between digital and physical threats for.
For example, the recent ransomware attack that led the gas shortages on the east coast illustrates how what starts as a digital event can also have physical ramifications.
As a result, we continue to push the envelope on innovation, we are building on the IP and best practices. We've developed over 20 years across thousands of enterprises in the corporate government and healthcare markets.
And recently established the first and only proprietary standards framework to define global best practices for enterprise resilience.
The CE certification program.
Fortunate 500 industry leaders are among the first organizations, who have already earned the best in enterprise resilience designation and many leading brands have since embarked on the process of.
Certification.
During the second quarter, we saw clear signs that organizations are thinking beyond the COVID-19 pandemic as demonstrated by the strong upturn we saw for larger transactions in key verticals and across multiple use cases, such as the future of work and travel related applications.
Since our founding nearly 20 years ago, our mission has been to keep people safe and organizations running faster.
In parallel we have also witnessed a growing intensity and number of threats, including extreme weather events manmade violence and digital threats, such as complex cyber attacks and outages.
With recent events that include massive forest fires in Oregon flooding in Europe in India, and Hurricanes impacting on the east coast in the Caribbean as well as cyber and ransomware attacks around the globe. Our mission has never been more important and organizations are recognizing the need for a C. M solution to mitigate the impact of Easter.
Rs on their people processes and assets.
In particular I'd like to acknowledge our teams that are helping to support those impacted by the forest fires on the west coast burning hundreds of square miles.
Been actively supporting statewide initiatives across a variety of jurisdictions to help respond to the fires and keep people safe.
Our Q2 results demonstrate the growing interest in our <unk> and public warning solutions driving revenue in the second quarter to $86.6 million, an increase of 33% from a year ago and above our guidance.
This revenue beat helped drive adjusted EBITDA to a little over a half million dollars, which was also above our guidance.
The combination of these financial results and our momentum in closing C. M deals give us the confidence to once again raise our revenue and adjusted EBITDA guidance for full year 2021.
Last quarter, we highlighted our growing pipeline of larger deals amid the reopening of businesses schools and other institutions.
I'm pleased to report that we are executing well and closing these large transactions, including a record quarter for E M wins, and a new high watermark for the number of deals over half a million dollars.
Both of these drove an increase in our overall average selling price, which nearly doubled from a year ago for the quarter.
In fact, we reached all time highs for Asps on both a quarterly and trailing 12 month basis with both above $100000.
Our land and expand sales model continues to drive our growth. We COVID-19 C. M transactions in Q2, which was a quarterly record. These.
D. C. M deals included a healthy mix of new customers adopting C M and existing customers expanding to the full <unk> suite.
And perhaps most importantly, we saw substantive success and our growing <unk> channel program within the quarter demonstrating expansion of our <unk> go to market strategy, and adding new customers and included a leading mobile retail store, operator, and an innovative cloud and digital transformation services company.
This partner's success represents an important turning point in expanding the global reach of our CGM platform in a way that complements our direct sales efforts.
Additionally, a broad cross section of our target markets continue to drive our recent success.
Overall, our second quarter <unk> successes included organizations like 1 of the largest health insurers in the United States and 1 of the top 10 biopharmaceutical companies, who both became new ever British customers in the quarter by adopting our <unk> suite and deals that were among our top 5 largest transactions in the quarter.
Another see him win involves senior leadership at a fortune 50 ranked health insurer, who was looking for a technology partner that could enable their commitment to keep associate sales regardless of location during a time of increased risk.
They selected <unk> for their new fusion center to meet these needs.
Similarly, our top 10, Biopharma company and S&P 100 member discovered that their homegrown critical event management solution was unable to support the growing number of use cases that they wanted to implement.
They realize that with ever bridge. They can quickly deploy a solution to keep their employees safe as well as deliver a high return on investment or ROI.
Other <unk> customers in the second quarter included 1 of the top global Cyber security leaders, Fortinet, who chose <unk> to improve business outcomes and support their near and longer term growth ambitions.
As a global leader in broad integrated and automated cyber security solutions, we're excited to see Fortinet deploy evergreen C E.
Or they're expanding global footprint.
And to unify its building access systems across a common physical security integration management solution.
And speaking of cyber security with cyber and ransomware attacks regularly making news headlines our timing for executing the acquisition of ex matters could not have been better.
Our integration plans are on schedule and the combination of ever bridge and ex matter solutions to deliver the leading digital and physical critical event management platform is already performing ahead of our initial expectations and we expect this trend to continue.
For example, in the second quarter, 1 of the largest financial services organizations in the United States chose ever bridge, when they need it and enterprise grade digital security solution to manage major incidents.
This financial services firm is leveraging our global reach and scale out of the box integrations automation and orchestration across multiple tools for major incident management across their operations.
Despite despite closing the ex matters deal in the middle of the quarter, we're already seeing positive momentum, which illustrates the power of combining the <unk> suite and our enhanced digital capabilities.
For example, in Q2 and within weeks of completing the acquisition, we were able to identify and close new logos sale with managed detection and response leader E Sun tire, who chose ex matters digital security in conjunction with our <unk> suite.
Our continued emphasis on land and expand resulted in a number of existing customers, adding multiple new applications to become <unk> customers in the second quarter.
These customers included a NASDAQ100 ranked architectural engineering and construction software leader, who upgraded to <unk> in order to reduce response times from hours down to minutes.
Last year, Panasonic North America, 1 of the world's largest electronics appliance mobility and energy companies became an air bridge customer selecting our risk center solution.
In the second quarter, they broaden their vision to increase efficiency and close security gaps by expanding to the C suite.
First Republic Bank, a leading private bank serving high net worth families first became an evergreen customer with risk center last year, and then expand it to a full <unk> suite after recognizing the value of a broader enterprise solution in the second quarter.
Following our high profile win with Tesla last year in the second quarter, we closed the deal with revealing a new electric vehicle manufacturer based in Michigan, whose environmental health and safety team previously adopted ever bridge mass notification and risk center.
In order to consolidate risk management and mobile work force safety by deploying a global security operations Center really expanded the C. M in the second quarter, enabling them to meet both their current and future strategic objectives.
We also expanded our footprint into the higher education market.
Reflecting our ability to attract leading brands in all categories.
John's Hopkins University, the first research University in the United States was looking for a way to monitor threat and risk data in order to alert students faculty staff and traveling homecare workers are dangerous situations in their areas.
They chose <unk> to do just that becoming ever bridges first higher education, CGM customer and the process.
Yeah.
In addition to a record breaking number of C. M deals in the quarter. We closed several large transactions that reflect the future of work with distributed work forces for example.
SAP P America selected safety connection pro and risk center to become an ever British customer in the second quarter.
<unk> long term vision aligns well with our <unk> capabilities to manage stress across the enterprise through a single pane of glass.
Additional customers, who added capabilities like safety connection or risk center to support the future of work included PPL services. The electric utility, serving 1.4 million customers in central and Eastern Pennsylvania.
A tier 1 multinational insurance company and a leading CAD software pioneer and market leader just to name a few.
The second quarter also saw continued strong demand for our public warning solutions.
We are the global leader in population wide public warning with solutions used by over 1500 municipalities counties cities States and countries in every major region of the world.
Including more European countries than any other provider.
During the quarter, we extended this leadership by signing a countrywide deal with Estonia.
Who wired magazine has named.
The most digitally advanced society in the World.
In a country, where 99% of government services are available online.
Tony and required a system that supports multiple robust and reliable means of alerting the public to threats such as severe weather forest fires in viral pandemics.
Shows ever bridge, because we could meet the stringent needs for a public warning system that is easy to use secure and comprehensive.
This win illustrates our time to value benefit as we were able to meet a Sony is very tight implementation schedule.
Our win in Estonia also highlights the countrywide public warning deals Forever bridge can serve governments of the front end carriers at the backend and potentially both.
In the case of Estonia, all 3 carrier networks will also deploy our solution.
European wins, such as stone here as well as our previous wins in Sweden, Netherlands, Norway, Iceland increase continue to position ever bridge is the leading population warning solution.
Our Estonia when it's also a strong reference for other European Union member countries, we're evaluating solutions to help them meet the EU wide mandate for population warning systems.
We are actively responding to rfps and are excited about the opportunities ahead of us.
In addition to new wins, a recent successful public warning deployments such as the new National public warning system for the United Kingdom will both help to protect over 100 million residents and visitors as well as serve as an excellent reference.
Another important public safety win in the quarter was the Swiss Canton abroad, which includes lake Geneva, a busy tourist destination, who selected ever ridge to consolidate more than 100 services for the fire Brigade Police forces ambulance services and emergency medical services for the canton his entire population.
Yeah.
This deal demonstrates our powerful network effects with our platform extends across multiple stakeholders and the community.
We also saw several wins at the city County, and state level and geographies around the world, including the Middle East where network effects are a meaningful driver of our expansion.
We've gone from almost no presence in this region in this region just a few years ago to having a presence at over 70 customers I'm, sorry over 60 customers and 90 sites across several countries in the middle East today.
In the U S federal market.
We continue to leverage our strong fed ramp position with more authority to operate certifications or a T OS than any of our competitors.
And customers across numerous federal agencies and departments.
1 such win from the second quarter was a 6 figure it alerting transaction with the Federal Reserve Board of Governors, the governing body of the U S Federal reserve system.
B G oversees the nation's monetary policy and ensure the safety and stability of the financial system and they wanted a solution to help speed up the incident response and the ability to connect to numerous systems as part of a very sophisticated technology stack that interacts with the federal Reserve system Department of Treasury in private.
Banks when necessary.
Based on our security scale and proven reliability with other federal financial agencies ever bridge. It alerting it's going to be the focal point of their collaboration and incident response.
With our F R B G win.
British now supports every federal financial agency with at least 1 of our products.
Yeah.
Turning to our metrics for the second quarter.
Our performance clearly reflects the results of our <unk> strategy with large new customer wins, multi product expansions and continuing demand for higher ASP products driven by demand for our <unk> solutions.
We added 142 net new enterprise customers in the second quarter, increasing our enterprise total customer count to 5890.
A new high watermark of 19 customers selected or expand it to C. M. Raising the total number of <unk> customers to 158, a 61% increase in the number of <unk> customers from a year ago.
While this demonstrates excellent momentum.
It also highlights our significant opportunity for continued expansion with existing customers.
As in the first quarter, our momentum with large transactions continued in Q2 with quarterly Asp's there were over $100000 driven substantially by our record <unk> results.
Our growth in deal sizes. This year has also pushed our trailing 12 month ASP too.
To above $100000 for the first time to $107000 up 59% from a year ago.
Contributing to this ASP growth, we closed 60 deals valued at more than $100000 per year, including another record number of deals valued at more than $500000 per year more than doubling the number of deals greater than a half million from a year ago.
Also driven by E M wins.
From a product mix perspective, a record 67% of new on gross sales over the last 4 quarters came from new products, reflecting growing demand for our newer applications.
Our international business also continued to post strong growth results in Q2 with 28% of total revenue coming from outside the U S compared to 22% a year ago as we expand our presence in every major region of the world.
Our revenue mix by vertical was relatively consistent with past quarters at 65% from corporate 25% from local state and country wide government and 10% from healthcare, reflecting strong growth in the corporate market with increasing post vaccine use cases.
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 CGM to address numerous high ROI used cases.
In addition to the expansion of our direct global sales team our growing number of channel partnerships further extends our sales reach worldwide in the second quarter Fortune 500 distribution and solutions aggregator Tech data became 1 of the latest partners to enable customers to automate the response to critical events from cyber.
Tax on it outages to severe weather events and more and to build resilience against such occurrences.
Our partnership with with nucleus also announced in the second quarter provides us with deep vertical domain expertise in the nuclear electric and utility industries.
The recent colonial pipeline ransomware attack is just 1 recent example of the disruption in cost that can be associated with cyber attacks on critical infrastructure.
Our digital and physical critical event management solution leadership enhanced by our integration of ex matters and then combined with the Wiz nucleus software suite enables critical infrastructure providers to address dynamic cyber physical and emergency management threats much more effectively.
In fact, a large U S nuclear plant recently selected our combined solution to replace an existing system with our new physical security integration management to comply with industry regulations, while also enabling more rapid adoption of new security technologies in the future.
And just today, we announced the partnership with the associated press, or AP, which augments and enhances our more than 25000 risk center data sources.
With this partnership the AP adds further context to risks breaking and geopolitical news into our <unk> platform.
This will provide our customers with enhanced contextualize Asian, our risk data leveraging the reporting speed and deep expertise of AP journalists and 250 locations across 100 countries, enabling our customers to better evaluate the potential impact of threats on there are people processes and ask.
Sets.
As a global pioneer and creator of the CGM category, we regularly aimed to bring together leaders from around the world to drive thought leadership and innovation.
Our strong market position helped us attract thousands of executives from around the globe to the most recent installment of our road to recovery series of executive thought leadership symposia in Mei Li.
Alumina Aries C level executives and experts presenting included President and Bill Clinton former Secretary of State Madeleine Albright.
Steve Forbes, Chairman and editor in Chief of Forbes Media.
As well as CDC Foundation, Chief Executive Officer, Dr. Judy Monroe.
And CDC Deputy director for infectious diseases, Dr. J C Butler.
As well as a special address by director General of the World Health organization Dr. Tetris.
If you missed the event replays of keynotes on topics ranging from leadership at a time of crisis to assessing risks and building organizational resiliency are still available on demand.
Finally, we recently launched the first and only global certification program for critical event management.
This new initiative provides an assessment of an organization's readiness and resilience ahead of the next pandemic or critical event, whether it's digital or physical.
Leveraging 20 years of best practices, and Knowhow, serving nearly 6000 enterprise customers. The assessment provides a ranking of how the organization compares to those following the latest in the seed industry best practices.
Which companies can share to attract and retain customers partners and employees.
Some of the biggest brands in the world have already adopted <unk> certification.
Such as financial services Giants Goldman Sachs, and discover mass media and entertainment conglomerate NBC Universal.
Multi national Chemical Corporation, DAU, and global pharmaceutical leader Alexia on which was recently acquired by Astrazeneca.
All of these leaders have attained best in enterprise resilience designation to.
To do so these organizations met or surpassed benchmarks in key measurable areas demonstrating their commitment to enterprise resilience.
Enterprises, who go through the certification process are delivered a comprehensive analysis, including details covering what they can do to raise their preparedness and resiliency to today's standards, a top priority for boards and C suites.
As a.
Visionary in pioneer we believe ever bridge is well positioned to become the de facto standard for enterprise digital and physical threat preparedness protection and mitigation.
In summary, we are excited about our progress at the midpoint of the year with momentum from CGM and public warning.
Growing demand for combined digital and physical resiliency solutions and expanded use cases for the future of work.
We're looking forward to sustaining our momentum in the second half of the year as we continue to execute on our strategy to penetrate and lead a multibillion dollar market.
Now I'll turn the call over to Patrick for more details on our second quarter financial performance as well as our guidance for Q3 and full year 2021, Patrick.
Thanks, David.
We had another very strong quarter with record revenue of $86.6 million, an increase of 33% from a year ago and above the high end of our guidance range.
Our net retention rate continues to track above 110%, reflecting consistently strong customer satisfaction.
And bind with demand for additional Everbright 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 in the earnings release, we issued earlier today.
Gross margin was 72.5% relatively consistent from a year ago with the short term impact of acquisitions offset by efficiencies from greater scale.
Total operating expenses in the quarter were $64.7 million, an increase of 40% from a year ago, reflecting continued investments in our platform and our go to market strategy.
Adjusted EBITDA was $515000 well above the high end of our guidance range due primarily to the revenue upside in the quarter.
Net income in the second quarter was $1.5 million or <unk> <unk> per diluted share compared to net income of $1.2 million or <unk> <unk> per share a year ago.
On a GAAP basis, our net loss was $33.8 million.
Looking at our balance sheet, we ended the quarter with $568.3 million in cash cash equivalents restricted cash and short term investments.
Compared to $743.2 million at the end of the first quarter.
Reflecting cash used to acquire ex matters and seasonal cash flow patterns during the quarter.
Operating cash flow was an outflow of.
$5.1 million and free cash flow was an outflow of $9 million.
Total deferred revenue was $210 million at the end of the quarter, an increase of 51% from a year ago.
As we note 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.
Such a change in deferred revenue in any given quarter is not an accurate indicator of the underlying momentum in 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.
In addition, we continue to have 8 figures.
On invoice to backlog.
In other words backlog that is not in deferred revenue.
Which reflects contracts that have been signed but whose revenue will be recognized in future periods, along with being invoiced in future periods.
Now I'll turn to our guidance for the third quarter and full year, which includes the impact of our second quarter outperformance and our continued business momentum.
For the third quarter, we anticipate revenue of between $94, 1 and $94.5 million representing growth of 32% to 32%.
We anticipate adjusted EBITDA to be between negative 2.1 on $1.7 million.
We anticipate a non-GAAP net loss of between $5.70 to $5.3 million.
Or a loss of between 15 and 14 cents per share based on $38.3 million basic and diluted weighted average shares outstanding.
Stock based compensation expense is expected to be approximately $19.8 million in the quarter.
For the full year, we now expect revenue to be in the range of 362.8.
$363.8 million, representing year over year growth of approximately 34%.
We anticipate adjusted EBITDA will be in the range of 8 to $8.8 million.
We expect a non-GAAP net income of between 0.5, and $1.7 million or between 1 and 4 cents per share based on $38.2 million diluted weighted average shares outstanding.
This guidance assumes estimated stock based compensation expenses of 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 enthusiastic about our second quarter performance and believe that we have strong momentum going into the second half of the year.
Now operator, we'd like to open the call for questions.
Okay.
We will now begin the question and answer session to ask any question you May Press Star then 1 on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2 we aspect on the interest of time you. Please limit yourself to 1 question and 1 <unk>.
So on.
At this time, we will pause momentarily to assemble our roster.
And the first question comes from will power with Baird. Please go ahead.
Hey, guys. Thanks for taking the question. This is Charlie Ehrlich on for will on congrats on the great results in that Great C. M number 2 and you mentioned that the channel program was key to the success there and that's the number I was hoping you can you can expand a bit on the on the channel program as the channel an area you plan to invest more in or do you feel like you.
We're pretty well penetrated in the channel at this point thanks.
Hey, Charlie this is David Thank you so much for the question and when I first joined we talked about.
Our intention to increase our routes to market through partnerships channel indirect and we've been building up that capability over the last several quarters and we're seeing the flywheel starting to spin faster and faster now in it and it had a material impact on the total number of <unk> deals that we were able to close this quarter end.
I think it's great Dr King on that because.
Q2 is usually not our best <unk> quarter Tim.
Typically our last record was on the Q4. So the fact that we set an all time record with 19 C. M deals and in Q2 is really significant and something that we're very excited about.
And then Furthermore, you're saying that then translating into a number of large deals with a 167% increase in our 500 K plus deals year over year and a record number of 200, K plus deals as well for the quarter. So a lot of good traction around CE them overall.
Great. Thanks, very much thank you.
The next question comes from Scott Berg with Needham. Please go ahead.
Hey, guys. This is John Godin on for Scott I. Appreciate you taking my question just first on the ADP relationship how should we think about that from a sales perspective.
At any extra.
Extra opportunities that you weren't able to attack previously.
And what kind of impact do you think it'll have on win rates. Thank you.
Hey, John Thank you so much for the question, Yes, we just announced the AP relationship today and it's 1 we're very excited about we continue to associate ourselves with some of the biggest and the best brands on the planet Earth.
He is a very unique capability with a 250 locations around the world where they have people on the ground.
100 countries and.
They just have great access to information, which is differentiated.
It's just 1 of the 25000 data feeds that we have coming in to our CGM platform. So if you want to have situational awareness.
Yeah.
Minutes matter seconds matter, the ability to know exactly what's going on and have the situational awareness around things you care about your people your assets your supply chain supply routes.
Brand and reputation and things that could threaten that that.
That can be the difference between a successful mitigation and response or not for our company.
Or for our for our government or healthcare organization for that matter. So we think our strategy of aggregating high quality data partners and then Curating all of that data and turning it into actionable intelligence and actual information across a single pane of glass, which is our visual command center is the right strategy and we're getting really good validation.
Of that with partnerships like the AP.
Does allow for there's more options on things that customers can can buy so it does open up some opportunities I think theres going to be potential for a joint go to market and cross sell upsell. So it's just 1 of many we felt it was worth announcing because <unk> excited about it we're excited about it and because of the power of the brand.
And the global appeal that they bring but this is part of a larger product ecosystem strategy, which ties into what we talked about earlier with partnership and we're getting really good traction.
Great. Thank you congrats on the quarter. Thank.
Thank you.
The next question comes from Matt Stotler with William Blair. Please go ahead.
Hi, Thanks for taking my questions I guess, the first 1 and I'll go ahead and ask the billings question, obviously, there's a lot of questions around billings 1.
See deceleration, but obviously, some really pretty significant outperformance.
Strong results enough on the quarter I would love to just kind of dig into that in terms of any notable contributors or drivers obviously, you've talked about this kind of unrecognized backlog and I know theres. Some big deals in there on anything flowing through there that you can speak to is this you know whether on the countrywide side or otherwise or is this more of just the.
Thank you so on CGM kind of hitting deferred revenue in the quarter anything that you can share on that front would be helpful.
Yes, Matt Thanks, Al first Scott and then hand, it to Patrick but I think the number 1 driver of this quarter. The headline is record number of <unk> deals led to record number to 500, K plus deals record number of 200, K plus deals and that you are seeing the effects of that kind of flow through a lot of our metrics. So that's probably the number 1 driver for the quarter to focus on.
As far as we talk about the what we call backlog, which are deals that are contracted but don't show up in deferred.
It's a pretty significant number and Patrick why don't you talk about I don't think that's what's driving it and in fact, it's probably gotten bigger, but Patrick why don't you jump in on on that.
Yeah, well that that on invoice backlog is not in deferred and therefore, it's not.
Anyone's calculations on billings on uncompleted.
Backlog numbers now in.
The mid to high teens.
Sequentially quarter over quarter due to wins, such as the Estonian and some other deals. So we're excited about that and the ability to convert that into revenue over coming quarters.
And 1 other thing to mention I think it's folks do their billing.
Billings calculations, which as.
Matt you, even though theres no we don't point people to but I know that sometimes it can be confusing. So I'll go ahead and call out that the.
You'll see in our 10-Q that ex matters contributed $34 million to our deferred revenue. That's a combination of short term and long term a significant.
On a portion of that of long term because they they were able to collect for multiple years upfront.
About $34 million relates directly to ex matters.
Got it that's super helpful color.
And then maybe just 1 on.
1 on 911, right I mean, if it's something that we've kind of talked about for <unk>.
Going back to the <unk>.
Originations would be outsourced partnership and being able to kind of partner with that'd be brought into this larger nextgen Eni on 1 project with the state of California was doing.
Since then obviously you acquired Red Sky earlier this year.
Theres this interesting partnership with rapid on the west that debt.
You guys have mentioned I would love to just maybe.
If you could touch on maybe the initiatives with broader Nextgen 911, how critical those capabilities onto the platform and maybe what your vision is for your you know I don't want capabilities going forward.
Yeah. It's a great question, so youre right youre connecting all the dots everything that's happening from our partnerships, what we're building out with the platform.
It goes back to the network effects that we talk about <unk>.
Critical event management across both the private sector and the public sector the non.
On 1 system is 1 that's really ready to be.
It's ready for innovation and it touches the lives of everyone in the United States on this opportunities around the world as well so.
When when Theres something happens on the 911 call. There's a lot more data that you'd like to have than just what that person can share on the phone conversation verbally.
Rapid assets is really a leader in net invested quite a bit of money over years on building out really significant capabilities in this space and so youre, putting 2 leaders together.
And we're very excited about our potential to help companies.
I have to follow.
Increasing regulatory guidelines or just best practices around duty of care for.
For people that work for them as well as the public sector.
Net benefits in the first responders, who benefit from having better access to real time information and data to support what's going on and it really truly can save lives. So we announced the partnership with rapid Sos and then kind of unveiling. The Nextgen 911, we're going on more to say about that in future quarters, but we're very.
We're excited about where that can go and we've gotten tremendous feedback from both companies and public sector prospects after our announcement.
Thank you.
Great. Thanks again.
The next question comes from Brian Peterson with Raymond James. Please go ahead.
Hi, This is Thomas on for Brian just real quick on the corporate opportunity in Europe. It's been mentioned a few times about the flywheel effect that you've seen in states like Florida, where that helps drive new business and the state just curious how that's playing out internationally and what do we expect corporate demand to follow some of these potential wins, we've seen really interested.
How youre thinking about Europe, playing out.
Yes, John Thank you for the question I think it's a key moat around our business that over the long term I think is going to position us exceedingly well.
We're definitely seeing it happen around the world not just in Europe for example in Singapore.
You start with the front end with the government you get the carriers to get financial services manufacturing and you start to get other key vertical leaders and you just see those if you just see it light up on the map and we're seeing it now in the middle East as well.
So.
In Europe, we've got a really good footprint and we're getting we launched <unk> in Europe.
And we're getting.
Attraction and adding more corporate customers. There. So 1 of the things we're doing is putting together playbooks on how do we take a process that happens organically anyway, but how do we accelerate that and how do we use our marketing and thought leadership to make it happen faster. So that's something that we're trying different things with and as we continue.
To get traction there I think it just makes our results that much better. So really appreciate the question. Thank you.
Thank you.
Again as a reminder, if you would like to ask a question Press Star then 1 to join the queue.
The next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
Great. Thanks for.
My question.
Is it just more of a high level question for you Yeah I would.
Think you need to track all remote employees with a lot of companies being remote work and the various risks.
Clearly there are more spread out plays well into demand for your solutions, but some companies are trying to get people back to work. How can you help them given the different health and safety protocols can vary by state and even by county within state and is it better for your business model, if things stay more remote or if people start to return to the office or are they both drivers.
Yes, Mike. Thank you for the question, it's a really fundamental question and the answer is all of the above where an enterprise wide platform and we support all the use cases. So we have hundreds of out of the box integrations. So just for example.
You come into the office and you have got thermal cameras deploy to take People's temperatures coming in we're integrated to the thermal cameras. So if you walk in and you've got a fever, you've got a mobile app in your pocket.
You've got a fever.
Go work from home and get a COVID-19 test and potentially quarantine isolate.
If we're also integrated with our physical access control system. The travel management system on the Calendaring system. So we can say alright, David has got a fever.
He has been exposed to 10 other people on the office in the last week, let's send them on methods tell them to work remotely due to Covid test. This is all happening can happen in seconds or minutes as opposed to having the state contact tracers to spend the next day is trying to call around and do contact tracing. So it's really a next generation digitally transformed way of doing contact.
Tracing for the employer to help them mitigate that risk.
Iris.
It has hotspots goes up and goes down we're able if you're a multinational and as many of our customers they've got offices all over the world all over the United States, everyone has different guidelines about what the rules are the systems able to keep track of that in an automated way help with enforcement.
Tied into the.
Physical security information management system for the building so as you've got guidelines on how many people should be in a particular space around social distancing in a meeting room.
Some can help reported on that and enforce that so there's a.
So many use cases around how do we get people back to the office safely.
And the reality is it's going to be some form of hybrid I mean, some people on the opex some people remote and the ability to keep track and manage that across all of those populations with 1 single pane of glass 1 platform, that's really a big part of the value proposition.
And our customers really seem to appreciate it in fact, we're using it for ourselves as we're managing our own.
Business. So it's a great question fundamental and I think this is what we built the platform for <unk>.
And I think were add on everybody else on that.
Great. Thanks.
A follow up question for Patrick.
Ratchet leases on all the large deals on the CPM deals in particular very strong start to the year, but some things pulled into the funnel or do you still see strong trends for large deals in the back half of the year and given the record deals and increasing asp's.
As dollar based net retention trending higher and maybe we hit a new metric that might be above going forward.
It's Mike.
We are.
We didn't necessarily pull things into Q2, rather we see.
We are just really thrilled with the performance in Q2, and we are really excited about.
The second half looks like we've been building the business for a long time here to increase our value proposition and therefore, our asps.
And that's a metric that isn't going to go up into the right every single quarter, but yeah.
Zoom out and you look at the trend we're excited about it we expect total continued to head that way over time.
And what was the last part of your question.
Just curious on your share of dollar based net retention of about 10% I was just curious if it was getting to a higher level maybe.
Well.
We have.
We have bounce around much higher than 110% and as we continue to.
Drive a stronger value proposition and focus on landing, sometimes we land with a lot and then.
When we come back around and expand it can be many quarters down the line.
Other cases, it'll happen faster, so we've got a blend across businesses and geographies.
Think as we continue to focus on a huge lever for us over the next many years, which is continuing to sell into the base.
You'll see it.
Central for greater strength in that figure and if we are continuously exceeding something like 125% then we will call that out but for now given that it.
Yeah.
<unk> intends to to oscillate up and down a little debt, we'll just stick with reminding folks that it's greater than 110%.
Fair enough. Thanks, Patrick.
Yep.
The next question comes from Parker Lane with Stifel. Please go ahead.
Yeah, Hi, guys. Thanks for taking my question congrats on the quarter and a really diverse solid set of CDM. When you think about the opportunities here for the remainder of the year and going forward are there any particular verticals that youre seeing are most receptive to the value proposition right now that you could potentially throw some extra sales resources behind.
Hey, Parker Thanks for the question.
Yeah, we saw a pretty broad based strength on CE.
And I think it was a reflection of.
With.
Notwithstanding the Delta Varian with the vaccines, becoming more prevalent.
These are starting to open up and look at kind of a broader.
Router turn things that they need to do going forward.
So we're we saw some really encouraging signs.
Health care has been really tough vertical for us during COVID-19 because.
Most of our customers were really.
Focus on dealing.
With the crisis and we.
We started to see some big deals come back there.
On the other sector as you know we've been really busy helping retailers kind of reopen and we've had.
Surprising traction with the retailers throughout Covid as we've been helping them. The tech sector has been great we've been big customers.
Market, it's been pretty broad based to be honest with you. So.
Everyone is thinking about this now it's just a big topic.
And now is the time for them.
They've got to do something and now they've got a little bit more bandwidth to do something more strategic.
No. It makes sense a quick follow up for you Patrick on the deferred revenue front would it be fair to say that ex matters is the primary factor behind the nice sequential jump in non current deferred revenue and so we expect that trend to continue going forward.
Well.
Yes, and no. So the first question is yes, we are.
Historically have not made a habit of.
Chasing long term deferred revenue, but instead prefer to try to keep the model as clean as we can and go 1 year at a time in terms of invoicing and collections. So yes that jumped that sequential jump.
Has everything to do with ex matters.
But going forward.
Don't like I said, I think over time as that as that bleeds down I think you'll see a return to normal which is a greater focus on current deferred rather than long term.
Got it makes sense perfect. Thanks, again, and congrats on the quarter.
Thank you. Thank you.
The next question comes from Koji Ikeda with Bank of America. Please go ahead.
Hey, guys, a really great quarter. Thanks. Thank you for taking my questions a couple from me.
First 1 on the tech data partnerships just curious here they got they got 125000 on their channel. So I guess, what does it mean for the go to market strategy from your perspective, and I guess, how does it also open up maybe potential new market areas, either upmarket downmarket or maybe even new verticals.
Thanks, Koji, yes, great question I think.
Tech data and more broadly across our partnership.
It's great when you can get thousands of people selling your solution. In addition to the dedicated sales force you have so there are definitely areas, where it's really helpful to get extra coverage. So there are some parts of the world, where we don't have as many sales people on the ground as we'd like.
So geography isn't is a factor as.
We've been selling bigger deals kind of moving up market trying to sell more to the C suite selling.
Fortunately 1000, global 2000, and some of the smaller customers now we can.
Maybe more cost efficiently pursue some of these channel partnerships. So that's very helpful. So we can kind of free up our dedicated resources to do the bigger ASP deals and.
Some of the what I call kind of product led ecosystem partnerships like we talked about with nucleus, where we're getting very deep vertical industry expertise around critical infrastructure.
On that we can put together with what we're doing and create really unique and differentiated proposition for the end customer.
So those are some of the categories and.
First we have to sign up the partners and then weave.
On made efforts in terms of getting better at how we enable our partners. So we sign them up and let me go on to the enablement phase.
Start to build funnel and then you start to see the deals come through.
So thats really gratifying and we're starting to see more and more of that thank you.
Got it thank you.
And just 1 follow up if I may on on the ex matters acquisition is it possible to get the ex matters contribution to the revenue for the quarter and really given the positive commentary throughout the call I guess are you expecting much more than.
And then the $911 million in total revenue that you guided for ex matters earlier this year.
Yeah. It's a great question. So let me just give an update on what's going on with ex matters.
1 is we are.
Probably ahead of schedule on getting them integrated with the organization and we acquired a really tremendous team they understand our space and the strategic fit of digital plus physical.
It is resonating well with customers and so based on our internal expectations, where we thought we'd do on sales like we're doing better.
And so we certainly are going to try to continue that.
We are integrating we did have an ICA business previously.
No.
We're integrating those teams have already been integrated so it is interesting in terms of.
Which deals were already in the funnel, we have won them anyway, not 1 of them. So we're really not and it's probably impossible to kind of break out going forward, because we're putting the teams together.
Our overall guidance reflects our view of the consolidated view going forward and overall.
We're very bullish on the acquisition and the results exceeded what we thought price.
Prior to <unk>.
Having gone through with Sarbanes Oxley and closing the deal on all of that.
Thank you God got it. Thank you. Thank you very much Super clear. Thank you guys. Thank you.
The next question comes from Terry Tillman with true. It. Please go ahead.
Yes, good afternoon, everyone and congratulations from me, particularly on the <unk>.
Syed.
I guess I had a question in terms of the public warning opportunity.
In the U K, so I'd like to learn a little bit more about so is this like long term contracts with the 3 mobile operators and what about on the front end and then I had a follow up.
Yeah, Hey, Gary Thanks for the question so yeah the U K.
We won the 3.
Largest carriers and we've implemented them.
Really record time.
Which is great and so we were able to announce that the front end is still a legacy front end so.
There is a possibility at some point in the future that there could be on upsell on the front end side as well.
Okay, well good luck on that and I guess my second part of the question David just relates to you know.
You talked about on important region, a higher population region, probably a lot of economic activity in Switzerland that I think about 1 what I'm curious about you don't get a lot on ongoing questions about the EU opportunity more broadly speaking going forward do you see it maybe playing out where you get more countrywide deals initially or maybe in some instances actually youre going to get paid.
Youre going to end up kind of knocking off some of the regions. What are you seeing in terms of the consumption pattern for the rest of the year next year.
Well, yes, Terry on some very great question, because what we're actually seeing now for example in Norway, We're starting to win deals at the more what I'll call state and local type level, where we're getting cities.
Signed up.
Historically, we would just do the countrywide, but we're finding that once you're in with the carriers. There are use cases, where the smaller municipalities.
Not just the entire country has their own use cases, they want a solution for so it's an interesting opportunity for us too.
Sell additional deals within a country and I would say, where we're getting some early traction on that is Norway and so we're looking at how we can try to do more of that which would be kind of in addition to the country why ideal opportunity.
Alright. Thanks.
Thank you.
The next question comes from Brian Thaler with Stephens. Please go ahead.
Hey, guys. Thanks for taking my question and congratulations on the quarter.
Just a quick 1 here I'm curious.
Have you seen any noticeable change in customer behavior or buying patterns.
Over the past several months I'm, just kind of curious.
If the resurgence in Covid has impacted.
Your outlook or custard customer demand in anyway.
Hey, Brian. Thanks for the question look I think it's a really fundamental question. It's a good question.
If you remember before Covid.
We were putting some really great numbers.
And when Covid hit I think we still have very solid numbers to COVID-19, we pivoted on specific use cases around vaccine distribution and contact tracing.
But you saw if you go back you know.
A year or so ago, you saw on Asps.
<unk> are much lower and I think youre seeing now the asps are coming strong we're getting more big deals.
So I think.
There's a lot of kind of reopening. These use cases that are very compelling for our customers to use the CGM platform 4 and so I think we're seeing that in the big deals. We are seeing that in asps. So that does feel like a change to me and I said 2 quarters ago on I said last quarter, I said I'm seeing more big deals in the funnel and I think we are.
And able to execute on those as you're seeing with some some records. This quarter. So I do think it is a change what will happen now with the Delta variant kind of surging in different parts of the world will.
We will have to see that's really happening in real time.
But but we do have use cases that are.
We have so many use cases some of them are good for reopening and obviously some of them are helpful. When youre dealing with the critical on kind of like a pandemic. So we have the ability to help our customers in either scenario, but yes, we are seeing some positive signs, particularly around the big deals.
Got it and I'm curious, specifically, which CGM use cases are you seeing the strongest demand for right now and also have you seen any.
I know, it's still early days on ex matters, but I'm curious have you seen any tangible increase in the CE in pipeline that you would attribute directly to ex matters.
Yeah, I think there's a lot of interest around what I'll call the future of work or hybrid work scenarios and the ability to sort of there's more and.
More focus on just overall duty of care for companies with their employees. It's it's a focus like theres never been ever right and so on.
It's really top of mind. So that that is that is definitely a catalyst for us and again as I mentioned in my remarks.
We built safety connection as a core component of the CGM platform years ago, specifically around remote workers and managing a hybrid environment. So we think that.
That's a big driver and what was the second question Brian.
If you have seen.
The pipeline increase is a direct result of of ex matters and the capabilities that brings you and also just the fact that you're selling closer to.
Revenue in executives I guess.
Yes, Patrick do you want to speak to that 1.
Pipeline as it relates to ex matters well we've been.
Integrating the businesses practically since before the acquisition began we were excited to do that so I would say that.
And in part of the thesis for the acquisition for the merger was.
Going back many quarters customers.
Existing customers coming to us and saying you're really knocking out of the park with like safety and physical but we also need to combine this with digital.
The pipeline is growing pre acquisition and I think now as we've formed the merger and we're going to market with digital.
And physical at the same time with the fusion concept we are seeing.
Greater demand.
Got it.
That's helpful. Thank you for the time guys.
Thank you.
Okay.
This concludes our question and answer session I would now like to turn the conference back over to David Meredith for any closing remarks.
Well, thank you for joining our call today.
As a growing number of organizations recognize the numerous benefits of our proven scalable and reliable digital and physical resiliency solutions, we are well positioned to continue penetrating a multibillion dollar opportunity as we look ahead.
We hope to see many of you at the Canaccord growth Conference later this week. Thank you again goodbye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].