Q3 2021 Everbridge Inc Earnings Call
Hello, and welcome to the Everbridge third quarter Q1 earnings Conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference fashion by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions.
To ask a question you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. Now I'd like to turn the conference over to Patrick Brickley, Chief Financial Officer. Please go ahead.
Now I'd like to turn the conference over to Patrick Brickley, Chief Financial Officer. Please go ahead.
Good afternoon, and welcome to Everbridge's earnings conference call for the third quarter of 2021. This is Patrick Brickley, Executive Vice President and Chief Financial Officer of Everbridge. With me on today's call is our CEO David Meredith.
This is Patrick Brickley Executive Vice President and Chief Financial Officer of ever Bridge with me on today's call is our CEO David Meredith.
After the market closed we issued our earnings release, which can be accessed on the Investor Relations section of our website at ir.everbridge.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 might cause such differences include but are not limited to those discussed in our forms 10-Q, and 10-K, as well as other subsequent filings with the SEC. Information provided on this call reflects our perspective only as of today and should not be considered representative of our views as of any subsequent date. We explicitly disclaim any obligation to update any forward looking statements or our outlook.
The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include but are not limited to those discussed in our forms 10-Q, and 10-K, as well as other subsequent filings with the SEC. Information provided on this call reflects our perspective only as of today and should not be considered representative of our views as of any subsequent date. We explicitly disclaim any obligation to update any forward looking statements or our outlook.
That might cause such differences include but are not limited to those discussed in our forms 10-Q, and 10-K as well as other subsequent filings with the SEC information provided on this call reflects our perspective only as of today and should not be considered representative of our views as of any subsequent date, we explicitly disclaim any obligation to update.
any forward looking statements or our 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 his prepared remarks. David.
With that let me turn the call over to David for his prepared remarks David.
Thank you Patrick and thanks to all of you for joining us today. We delivered strong third quarter results that again exceeded our guidance for revenue and profitability. Revenue of $96.7 million increased 36% from a year ago. And both adjusted EBITDA and non-GAAP net income were positive for the sixth quarter in a row.
We delivered strong third quarter results that again exceeded our guidance for revenue and profitability Rep.
Revenue of $96 $7 million increased 36% from a year ago.
And both adjusted EBITDA and non-GAAP net income were positive for the sixth quarter in a row.
Our strategic CEM and public warning platforms continued to be chosen by large enterprises across the globe to keep people safe and their organizations running. As evidenced by a record number of deals valued at more than a half a million dollars that we closed in the quarter and a record international mix driven by CEM deals public warning wins and existing customer expansions.
Our strategic CEM and public warning platforms continued to be chosen by large enterprises across the globe to keep people safe and their organizations running. As evidenced by a record number of deals valued at more than a half a million dollars that we closed in the quarter and a record international mix driven by CEM deals public warning wins and existing customer expansions.
driven by CEM deals public warning wins and existing customer expansions.
These strategic wins and expansions fuelled our trailing 12 month asps that exceeded $100,000 for the second quarter in a row, increasing by 41% from a year ago.
As greater numbers of the global population become vaccinated against COVID-19, organizations, schools and governments continue to move towards plans for more normalized protocols. However, to avoid outbreaks that could impact people and operations as well as meet guidelines and requirements promulgated by various governmental and health organizations globally, they will need solutions to manage the continuing risks related to COVID-19.
Promulgated by various governmental and health organizations globally, they will need solutions to manage the continuing risks related to COVID-19.
Additionally, most enterprises continue to feel the effect of both natural and manmade critical events such as the forest fires that have impacted the western US and Australia, as well as an increasing number of digital threats, such as ransomware and other forms of cyber attacks and IT outages that can impact their people and processes.
<unk> and processes.
Furthermore, the global supply chain faces massive disruption, which can be mitigated in part by critical event management.
As a result, our CEM suite continues to be increasingly relevant. And in the third quarter we saw key CEM wins, both in North America and internationally across all of the market markets we target, corporate, government and health care.
We also recently extended our CEM certification program internationally to further establish ourselves as the clear leader in setting the standards for best practices against which organizations will be evaluated globally.
Before I get into the highlights of the quarter, I want to acknowledge an important national development here in the United States.
The recent passage by Congress of the Historic 1.2 trillion dollar infrastructure package presents a potential catalyst to unlocking funding opportunities and accelerating projects with federal state and local governments for our CEM for public safety solutions.
Our capabilities can provide increased resiliency across a variety of strategically important categories, such as the modernization of the nation's emergency 911 and national warning systems.
We continue to demonstrate our expertise and leadership in these areas with recent launches of new products and feature enhancements such as Everbridge 911 connect and our recently announced integration with rapid SOS for providing more contextual data to dispatchers at the time of a 911 call.
And our E 911 capabilities to help direct emergency responders to the exact location of someone's seeking assistance through multi line telephone systems.
As we announced yesterday, Cisco's Webex calling and UCM cloud platforms can now leverage this E 911 capability as well.
Additionally, Everbridge public alerting systems can help support continuous secure collaboration for warnings across federal state local and tribal governments during emergencies.
When coupled with our recently launched next generation version of our resident connection product. This enables local governments to reach a higher proportion of their residents in a critical event.
Given our fed ramp compliance status and growing footprint at all levels of government, Everbridge remains well positioned to benefit from increasing investments in infrastructure.
<unk> remains well positioned to benefit from increasing investments in it infrastructure.
Focusing now on our Q3 results. We saw continued strength in our critical event management business with key new and growth CEM deals around the globe.
New customers in the quarter included North American game developer Ubisoft and medical technology leader Stryker, both of whom chose broad CEM suites.
And leaning international organizations, such as one of the world's largest it services companies based in India, who is also implementing our CEM suite.
This important new win creates further expansion opportunities within this large international IT leader, as well as positions us to expand our CEM presence in India, where we have already had tremendous success with the widespread adoption of our public warning solutions.
In parallel, we continue to see existing public warning and mass notification customers among our over 6000 customers upgrade onto our CEM platform.
In Q3 the CEM expansions included global banking giant citizens financial, as well as one of the largest global professional services firms, who has the potential to further expand in the future.
Health care leader Hackensack Meridian health, a top ranked hospital system in New Jersey, who was already an it alerting and way finding customer expand it to become a CEM customer in the quarter.
Finally, in the government market, the United States Department of Commerce chose our CEM platform to address gaps with Bureau communication and situational awareness.
Our successful combination of X matters into our larger suite of CEM for digital offerings extends our capability to support both digital and physical risks across a single pane of glass. This very powerful proposition differentiates us in the market. It also strengthens our broader land and expand sales motion, which leverages our full product portfolio to accelerate customer adoption and cell deeper into the enterprise.
Our successful combination of X matters into our larger suite of CEM for digital offerings extends our capability to support both digital and physical risks across a single pane of glass. This very powerful proposition differentiates us in the market. It also strengthens our broader land and expand sales motion, which leverages our full product portfolio to accelerate customer adoption and cell deeper into the enterprise.
broader land and expand sales motion, which leverages our full product portfolio to accelerate customer adoption and cell deeper into the enterprise.
Social media giant Twitter is a great example of executing on this land and expand strategy. Twitter, our initially purchased mass notification five years ago. They added safety connection two years ago and in Q3, they expanded the CEM and will incorporate numerous data feeds to their fusion center integrating digital and physical security.
Twitter, our initially purchased mass notification five years ago. They added safety connection two years ago and in Q3, they expanded the C M and will incorporate numerous data feeds to their fusion center integrating digital and physical security.
Pharma leader Takeda demonstrates an additional example of fusion centers driving our land and expand strategy with their commitment to further build out their global security operations center with CEM.
Of course, winning new customers that have the potential to expand over time is an important element of this strategy as well. Some of these new customers in the quarter included pharma leaders Merck and [Tampa], global accounting leader, BDO an automotive retailer discount tire. On top of our US Department of Commerce CEM win which was just one highlight from a very busy third quarter for government business.
Global accounting leader, BDO and automotive retailer discount tire.
On top of our U S Department of Commerce E. M win which was just one highlight from a very busy third quarter for government business.
We signed several growth transactions with federal departments and agencies in the US. And also closed a number of international deals.
Among our federal wins in the quarter, the Muscogee Nation Health system, which supports the fourth largest native American tribe in the United States, initially purchased Everbridge in February for a vaccine distribution. In Q3, they expanded the contract to improve communications with their patients as well.
We are also happy to welcome the centers for Medicare and Medicaid services as a new federal customer.
CMS will leverage ever bridge to notify employees of cyber security training and warnings, COVID-19 updates, safety and compliance protocols, important human resources information and to measure employee engagement.
The US Department of Agriculture's office of Homeland Security lead security preparedness and response efforts to ensure USDA employees and stakeholders are preparing to support the agency's mission.
They selected Everbridge to enhance their risk intelligence monitoring of key locations, both domestic and international to keep ahead of any potential threats to the USDA.
The food and drug administration, or FDA will be leveraging Everbridge risk center to monitor their physical locations across the globe to help ensure they have no gaps in situational awareness.
Additionally, the office of protective intelligence of the US Marshals service is following in the footsteps of the US courts and their protective services efforts. With Everbridge, the Marshal service can gather hyper relevant data and insights to detect and protect from new and evolving threats.
The US attorneys Middle District of Florida serves 35 counties across the state, which is over half the population of Florida, making the Middle district the second most populous US Attorney district in the nation.
Last quarter, they expanded their use of Everbridge risk center and added more locations to monitor, collect and analyze threat data to better respond to potential risks in their offices and employees.
In addition to our CEM and related progress, we recorded a number of important public warning wins to expand our global leadership position in this category.
During the quarter, we received notification that we want another of the top five most populous countries in the European Union or EU. Spain with a population of $47 million. Spain shows our cell broadcast solution in a competitive bid process.
Spain with a population of $47 million.
Spain shows our cell broadcast solution in a competitive bid process.
As the leading provider of hybrid public warning solutions with cell broadcast location based SMS and other 5G compliant modalities across both government front ends and carrier back ends, we are increasingly seeing opportunities to leverage our land and expand strategy and public warning as we've done successfully with CEM.
For example, in the third quarter, we inked a significant expansion in the Netherlands, with our country wide public warning system.
At the same time network effects, where municipalities within a country also adopt ever bridge can multiply the number of opportunities as we've seen in Norway, Sweden, Singapore and other countries.
Our recent highly visible go live in Australia further highlights our ability to support large scale complex countrywide deployments that are having real impact for serious threats the countries are facing right now. And further emphasizes that ever bridge represents the most reliable choice for countries still looking for a public warning solution partner.
For a public warning solution partner.
Allow me to pivot from our strong topline results to our overall execution balancing both growth and profitability that delivered positive adjusted EBITDA that was also above our guidance range. Although the COVID-19 pandemic and an intensely competitive hiring environment continue to create uncertainty in the overall market, our ability to generate positive non-GAAP profitability for six quarters in a row gives us confidence in the long term efficiencies that will increasingly be able to leverage as we continue to grow the business.
Uncertainty in the overall market our ability to generate positive non-GAAP profitability for six quarters in a row gives us confidence in the long term efficiencies that will increasingly be able to leverage as we continue to grow the business.
Turning to our metrics for the third quarter, our performance again illustrates the success of our CEM strategy with large new customer wins, multi product expansions and triple digit ASPs.
We added 120 net new enterprise customers in the third quarter, raising our total enterprise customer count to 6010. 15 customers, either selected or expanded to our CEM platform, bringing the total number of CEM customers to 173, a 57% increase in the number of CEM customers from one year ago.
15 customers, either selected or expanded to RCM platform, bringing the total number of <unk> customers to 173, a 57% increase in the number of C M customers from one year ago.
As in the second quarter, our momentum with large transactions continued in Q3 with quarterly ASPs that moderated slightly from our record second quarter and resulted in trailing 12 month ASPs that were again above 100000, an increase of more than 40% from a year ago. Contributing to this ASP growth were 45 deals worth more than $100000 per year. And another record for the number of deals valued at more than $500000 per year.
As in the second quarter, our momentum with large transactions continued in Q3 with quarterly ASPs that moderated slightly from our record second quarter and resulted in trailing 12 month ASPs that were again above 100000, an increase of more than 40% from a year ago. Contributing to this ASP growth were 45 deals worth more than $100000 per year. And another record for the number of deals valued at more than $500000 per year.
Contributing to this ASP growth were 45 deals worth more than $100000 per year.
And another record for the number of deals valued at more than $500000 per year.
From a product mix perspective, 63% of new and gross sales over the last four quarters came from new products as we continue to see demand for our newer applications.
Our international business also continued to post strong growth results in Q3 with a record 32% of total revenue coming from outside the US, compared to 27% one 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 67% from corporate, 24% from local state and country wide government and 9% from health care, reflecting strong growth in the corporate market with increasingly post vaccine use cases.
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 growth.
These outstanding metrics demonstrate the growing market acceptance of our overall CEM strategy as well as our ability to close larger transactions from our pipeline, as organizations increasingly embrace CEM to address numerous high ROI or return on investment use cases.
Other operational highlights from Q3 include our progress with our partner channel, which continues to be a valuable driver of business activity. Just a few weeks ago, Deloitte Cyber security center for the EMEA regions became our latest partner.
Just a few weeks ago, Deloitte Cyber security center for the EMEA regions became our latest partner.
Everybody's CEM solutions will now be offered as part of the Lloyds EMEA cyber sphere centers cloud-based detection response services for government and commercial customers to enhance the protection and continuity of digital and physical operations.
During our last call, we introduced a CEM certification program with discover Goldman Sachs, NBC, Universal Dow and Alexian among the first fortune 500 leaders, earning the prestigious best in enterprise resilience designation.
Since our last call, financial services leaders, Finastra and Comerica Bank pharmaceutical leader Takeda and international advertising firm Dentsu have joined those organizations ranked as best in enterprise resilience. With some leveraging this certification to distinguish and promote their own brands.
We recently extended our international CEM certification momentum with global industry leader Siemens representing another of the latest organizations outside North America to earn this prestigious designation.
Turning to continuing the innovation, last quarter I mentioned that organizations are finding that our travel risk management solutions, including safety connection are perfectly suited for work from home work from wherever you are and hybrid work location policies.
As employees began returning to business travel, we see this interest accelerating. With ISO's recent publication of standard 3130, enterprises are looking to adopt its guidelines on how to manage the risks for organizations and their travelers, including threat detection, risk assessment and prevention and mitigation strategies. Everbridge remains very well positioned from increased interest and attention to travel related risk. In fact, just as organizations are improving their formulation of playbooks for managing traveler and remote work risk, we're accelerating the execution of our strategic product roadmap to bring additional travel risk management capabilities in-house.
With ISO as recent publication of standard 31 30 <unk>.
Enterprises are looking to adopt its guidelines on how to manage the risks for organizations and their travelers, including threat detection risk assessment and prevention and mitigation strategies.
<unk> remains very well positioned from increased interest and attention to travel related risk. In fact, just as organizations are improving their formulation of playbooks for managing traveler and remote work risk, we're accelerating the execution of our strategic product roadmap to bring additional travel risk management capabilities in house build.
Building on our 20 years of critical event management and risk intelligence leadership. In order to accelerate our success, we completed a tuck in acquisition of partner Anvil Group a few days ago.
In order to accelerate our success, we completed a tuck in acquisition of partner Anvil Group a few days ago.
The combination of Anvil's risk matrix platform with CEM will provide medical security and travel assistance and advice to those in need and help keep people safe wherever they go.
This strategic acquisition further extends our position as the leader in critical event management and risk intelligence, which is especially timely with today's evolving travel and remote work location trends.
In summary, we continued our momentum in the third quarter with results that were above our guidance ranges. As our business scales, we keep driving incremental margin improvements and we're excited that we've continued to generate strong topline growth while also increasing profitability.
We look forward to closing out a record year as we leverage our leadership position in the market to keep penetrating the multibillion dollar opportunity we are pursuing.
Now I'll turn the call over to Patrick for more details on our third quarter financial performance and our guidance for Q4 and full year 2021. Patrick.
Thanks, David. We had a great third quarter with record revenue of $96.7 million, an increase of 36% from a year ago and above the high end of our guidance range.
Our net retention rate continues to track above 110%, reflecting continued customer satisfaction combined with demand for additional Everbridge technology at existing customers.
Looking at the details of our P&L unless otherwise indicated, I'll be discussing our 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 73.3% relatively consistent from a year ago with the impact of growth investments offset by efficiencies from greater scale.
Total operating expenses in the quarter were $68.7 million, an increase of 38% from a year ago, reflecting continued investments in our platform and our go-to-market strategy.
That EBITDA was $4.9 million, well above the high end of our guidance range due primarily to the revenue upside in the quarter and to a degree from a more challenging hiring environment as well.
Net income in the third quarter was $2.1 million or 5 cents per diluted share, compared to net income of $2.8 million or 8 cents per share a year ago. On a GAAP basis, our net loss was $28.7 million.
On a GAAP basis, our net loss was $28 $7 million.
Turning to our balance sheet, we ended the quarter with $555 million in cash cash equivalents restricted cash and short term investments. Compared to $568.3 million at the end of the second quarter, reflecting seasonal cash flow patterns during the quarter.
Compared to $568 $3 million at the end of the second quarter, reflecting seasonal cash flow patterns during the quarter.
Note that our cash balances do not reflect our strategic acquisition of Anvil group for approximately $161 million, which will be reflected in our fourth quarter results. Operating cash flow was an outflow of $2.7 million and free cash flow was an outflow of $7.5 million.
Total deferred revenue was $214.1 million at the end of the quarter, an increase of 44% from a 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.
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.
As such the 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.
We believe our trailing 12 month performance, it's much more indicative of our overall business trends.
Now I'll turn to our guidance for the fourth quarter and full year, which includes the impact of our third quarter outperformance and our continued business momentum.
Note that the anticipated impact from our Anvil acquisition on fourth quarter and full year revenue is not material. For the fourth quarter, we anticipate revenue of between $102 and $102.2 million representing growth of 35%.
For the fourth quarter, we anticipate revenue of between 102 and $102.2 million representing growth of 35%.
We anticipate adjusted EBITDA to be between negative 1.8, and $1.4 million. We anticipate a non-GAAP net loss of between $7.8 and $7.4 million or a loss of between 20 and 19 cents per share based on $38.8 million basic and diluted weighted average shares outstanding.
We anticipate a non-GAAP net loss of between seven eight and $7 $4 million or a loss of between 20 and 19 cents per share based on $38 8 million basic and diluted weighted average shares outstanding.
Stock based compensation expense is expected to be approximately $29 million in the fourth quarter. For the full year, we are increasing our revenue guidance to a range of $367.6 million to $367.8 million representing growth of 36%.
For the full year, we are increasing our revenue guidance to a range of $367.6 million to $367.8 million representing growth of 36%.
We anticipate adjusted EBITDA will be in the range of $8.8 million to $9.2 million. We expect a non-GAAP net income of between $3.7 and $4.1 million or between 9 and 10 cents per share based on 39.5 million diluted weighted average shares outstanding.
We expect a non-GAAP net income of between three seven and $4 $1 million or between nine and 10 cents per share based on 39, and a half million diluted weighted average shares outstanding.
This guidance assumes estimated stock based compensation expenses of approximately $66.5 million for the year. And we continue to anticipate that free cash flow will be approximately breakeven and perhaps slightly positive 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 delivered a strong third quarter and are well positioned to close out 2021 with excellent financial results. Now operator, we'd like to turn the call open for questions.
Now operator, we'd like to turn the call open for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Please limit yourself to an initial question and a follow up. At this time, we will pause momentarily to assemble our roster. The first question comes from Scott Berg with Needham. Please go ahead.
Please press Star then two please.
Please limit yourself to an initial question and a follow up.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Scott Berg with Needham. Please go ahead.
Hi, David and Patrick. Congrats on the good quarter. David, I want just wanted to start kind of a high level. I think some of the global supply chain issues are in the news every other day or every other minute, at least it seems. Is that a scenario that you guys with your broader CEM package have had some success selling into or at least having some conversations on how you can help maybe mitigate some of those challenges there today? Yeah, Scott, thanks for your comments and the question. Supply chain is definitely one of the modules at CEM that we launched a few years ago and we have some major global brands that are using the CEM platform. When you think about CEM, it's the ability to keep track of everything you care about, and that's your people, your operations, your offices, your supply chains, also your supply routes. And then being able to, and your brand and reputation, and then being able to overlay that to know what are any other possible threats that are coming that could disrupt that. So it's a perfect scenario for CEM and it's definitely something that our customers are dealing with, and we're trying to help them with. Got it. And then Patrick wanted to see if you can give us some insight into the [Anvil] acquisition, $161 million is certainly a sizeable amount. Maybe some financial color on it in terms of you know trailing 12 month revenues expectations from packed in Q4 maybe how it's grown et cetera.
Hi, David and Patrick. Congrats on the good quarter. David, I want just wanted to start kind of a high level. I think some of the global supply chain issues are in the news every other day or every other minute, at least it seems. Is that a scenario that you guys with your broader CEM package have had some success selling into or at least having some conversations on how you can help maybe mitigate some of those challenges there today? Yeah, Scott, thanks for your comments and the question. Supply chain is definitely one of the modules at CEM that we launched a few years ago and we have some major global brands that are using the CEM platform. When you think about CEM, it's the ability to keep track of everything you care about, and that's your people, your operations, your offices, your supply chains, also your supply routes. And then being able to, and your brand and reputation, and then being able to overlay that to know what are any other possible threats that are coming that could disrupt that. So it's a perfect scenario for CEM and it's definitely something that our customers are dealing with, and we're trying to help them with. Got it. And then Patrick wanted to see if you can give us some insight into the [Anvil] acquisition, $161 million is certainly a sizeable amount. Maybe some financial color on it in terms of you know trailing 12 month revenues expectations from packed in Q4 maybe how it's grown et cetera.
Hi, David and Patrick. Congrats on the good quarter. David, I want just wanted to start kind of a high level. I think some of the global supply chain issues are in the news every other day or every other minute, at least it seems. Is that a scenario that you guys with your broader CEM package have had some success selling into or at least having some conversations on how you can help maybe mitigate some of those challenges there today? Yeah, Scott, thanks for your comments and the question. Supply chain is definitely one of the modules at CEM that we launched a few years ago and we have some major global brands that are using the CEM platform. When you think about CEM, it's the ability to keep track of everything you care about, and that's your people, your operations, your offices, your supply chains, also your supply routes. And then being able to, and your brand and reputation, and then being able to overlay that to know what are any other possible threats that are coming that could disrupt that. So it's a perfect scenario for CEM and it's definitely something that our customers are dealing with, and we're trying to help them with. Got it. And then Patrick wanted to see if you can give us some insight into the [Anvil] acquisition, $161 million is certainly a sizeable amount. Maybe some financial color on it in terms of you know trailing 12 month revenues expectations from packed in Q4 maybe how it's grown et cetera.
Hi, David and Patrick. Congrats on the good quarter. David, I want just wanted to start kind of a high level. I think some of the global supply chain issues are in the news every other day or every other minute, at least it seems. Is that a scenario that you guys with your broader CEM package have had some success selling into or at least having some conversations on how you can help maybe mitigate some of those challenges there today? Yeah, Scott, thanks for your comments and the question. Supply chain is definitely one of the modules at CEM that we launched a few years ago and we have some major global brands that are using the CEM platform. When you think about CEM, it's the ability to keep track of everything you care about, and that's your people, your operations, your offices, your supply chains, also your supply routes. And then being able to, and your brand and reputation, and then being able to overlay that to know what are any other possible threats that are coming that could disrupt that. So it's a perfect scenario for CEM and it's definitely something that our customers are dealing with, and we're trying to help them with. Got it. And then Patrick wanted to see if you can give us some insight into the [Anvil] acquisition, $161 million is certainly a sizeable amount. Maybe some financial color on it in terms of you know trailing 12 month revenues expectations from packed in Q4 maybe how it's grown et cetera.
David I want just wanted to start kind of a high level.
I think some of the global supply chain issues or in the news every every other day.
acquisition, $161 million is certainly a sizeable amount. Maybe some financial color on it in terms of you know trailing 12 month revenues expectations from packed in Q4 maybe how it's grown et cetera.
Yeah, sure Scott. The impact on Q4 is not material due the timing and deferred revenue here kind of et cetera, I think the color that I can provide at this point is that we anticipate approximately $5 million of acquired deferred revenue before the impact of purchase accounting.
The impact on.
Q4 is not material do the timing and deferred revenue here kind of et cetera, I think the color that I can I can provide at this point is that we anticipate.
Approximately $5 million of.
Acquired deferred revenue before.
Impact of purchase accounting and hair cut on that.
So we'll have more we we just closest a couple of days ago. So we will have more to discuss on the next call, but for now in Q4 the impact is not material. Helpful. Thanks for taking my questions everyone. Thank you. You bet. Thanks.
[noise] helpful. Thanks for taking my questions everyone.
Thank you.
You bet. Thanks.
The next question comes from Sterling Auty with JPMorgan. Please go ahead.
Yeah. Thanks, hi guys. Wanted to dive into the the EU opportunity you've had significant traction there. Can you give us a sense of where you are in the penetration of that opportunity and when or how should we think about the revenue ramp associated with the deals that you've already closed?
Yeah. Thanks, hi guys. Wanted to dive into the the EU opportunity you've had significant traction there. Can you give us a sense of where you are in the penetration of that opportunity and when or how should we think about the revenue ramp associated with the deals that you've already closed?
With the deals that you've already closed.
Sterling, hi. Thanks for the question Yeah, we are getting closer to the EU mandate deadline of the end of Q2 2022, and as we've always said unexpected that more of the activity would be back end loaded.
We are, we did have to do a full competitive bid process for the Netherlands, but we came out of that you know with a much bigger deal than we had previously and expanding what we had with him. And obviously, Spain was a strategically important win. We still see additional activity on our advising RFIs. As far as the revenue, you know the timing on these can vary in terms of how soon they get implemented and that sort of thing. To the best of our knowledge that the numbers are kind of baked into our guidance that we're giving. Patrick, feel for it or do you want to jump in and talk about the metrics a little more as well.
<unk> you know the timing on these can vary in terms of how soon they get implemented and that sort of thing to the best of our knowledge that the numbers are kind of baked into our guidance that we're giving Patrick feel for it or do you want to jump in and talk about the metrics a little more as well.
Yeah on that I think he basically cover to David they but we get these initial deals out of the gate. They rarely encompass the full opportunity with these countries you know, sometimes they'll they'll do a front end or part of the back end, but not the whole thing so.
We're excited that we continue to land deals were excited about the long game and the network effects. So we assume is deals are important to establish a sort of an umbrella that we used to go ahead and roll up a lot of business within the the geography. So so far so good in terms of knocking me down and hopefully no more to come.
<unk>.
And then one follow up how would you kind of characterize from a high level the business small bed and let me give you a little context I think you know investors are looking at the results that you had a couple of quarters ago, where was just evidence that it was just extremely strong and sometimes I think it's hard for us to.
To understand how the different opportunities are being layered in how the acquisitions like X matters are kind of contributing so would you just from a high level say that the momentum and the business is as good stronger or maybe took a little bit of a step back here in the quarter relative to what you saw over the last couple of quarters.
[noise] well I think that we're seeing some consistent trends, which are one we're selling up hiring of the organization. There's an increased awareness of the importance of C E M and.
We're doing a better job of bundling together are different C M capabilities into deals and and that's manifesting itself.
In the Asp's and the large deal. So this quarter, we did at an all time record for more of 500, K plus deals and we'd ever done in the company's history and that that helped to support you know a second consecutive quarter of six figure Asp's. So I I think that's a good view into.
The fact that customers are seeing this as being more important than that and that's a trend that I think I mentioned multiple earnings calls ago and and it's you know it's continues to develop so I think from that perspective speaks to the importance of C. M and the momentum that we have with the business Patrick you Wanna jump in.
[noise] yeah.
You saw continued improvement in our.
Globalization and with over 30% of our revenue coming from customers outside of the U S. You know a couple a couple of years ago that was single digit. So we're continuing to make progress and a lot of different areas. I think we said last quarter Windows C. E. M. Addition, count was around 19 I believe it was that we thought that that.
<unk> was a great result, but you know also sort of some of the timing of these deals will will not always be linear and we we didn't think that every quarter. Thereafter was gonna set a new record. So it's David mentioned, we've got a lot of continued success with C M and.
And we anticipate more to come.
Sounds good thank you guys.
Thank you Sir.
The next question comes from Matt.
Stolen with William Blair. Please go ahead.
Hey, guys. Thanks for taking the questions maybe just to start off with but you know if I look back you know a year ago no kind of Q2 Q3, Q4, and you were seeing a lot of you know obviously, obviously deals tied to some of the code specific did it feeds them across a you're providing a coach you you mentioned to prepare tomorrow.
That you're.
You're seeing a lot of contribution Ah kind of swinging back to non Toby used cases, if you will but you're just as we annualize you know the deals where where you did have those customers that we're adopting maybe your smaller kind of COVID-19 specific solutions are there.
For those types of use cases, one of those conversations look like as you're trying to no kind of you know you you can drive you up cell there or you know kind of expand their adoption of the platform more broadly would love to get some more color on what those conversations look like.
Yeah. So it is a great question. Thanks, Matt.
When we cell I use case around Covid, I mean, they're still buying.
Safety connection or or modules in the core C M platform.
And so once you do that then you you load up their information into the system and then immediately you've got several other use cases, you can do with that so from you know the first day if it if we're coming in like in my prepared remarks that I mentioned Muskegon help as a customer that we originally sold vaccine distribution and now they're using the platform for other.
<unk>.
Other ways to alert and inform.
[noise] their constituents. So we we've I think had pretty good success and being able to do that and now we're seeing you know with reopening. There's some things that are the same where you're seeing a lot of work workplace of the future type of initiatives, which play really well to our platform. We've always built the platform around knowing where your people are.
And monitoring threats wherever they are even if they're not at headquarters so that that fits really well, but now there's there's more more intense scrutiny.
Scrutiny on travel and the risks associated with travel now than we've ever seen so and you heard me say you know a year and a half ago a year ago that the travelers management use case, it pretty much completely dried up during COVID-19 and now we're seeing that come back really strong where people are starting to travel.
Again, and then also companies are having to go through and and really look at how do they manage the risk of people traveling and then you've got the ISO 31, 30 regulation. That's a guideline that's come out recently, which people are trying to comply too. So all that adds up to we're starting to see reopening of some of those use cases that that we'd like to do like travel risk manager.
<unk>.
Right Gotcha. That's helpful. And then maybe one just you know kind of looking at the the comment on the infrastructure Bill past, obviously, an interesting opportunities.
There's no kind of increased funding for some of these initiatives that that you guys just paid and benefit from but obviously you know I mean governments nurses you know.
Kind of a large bureaucracy and maybe a little slower moving so I mean, it is you're thinking about what that could mean and how that you might larian going forward I mean, what are your thoughts on timing and and what that might actually look like as I started to learn the business.
I I think I would think we would expect to see maybe some benefits to that next year or like you said it could be longer by the time revenue clothes, and but they're just projects that sometimes the federal government helps to fund it and that enables estate to move forward with something obviously that 911 infrastructure, there's a lot of opportunity to them.
Prove that and then continuing to modernize that messaging, we want an important deal to help how are the front end for the presidential alerting system for the United States. They still other things that could be done there. So.
We see a lot of areas, where it potentially this could help to unlock some things I still very early and it's something we'll have to continue to update you on as we go forward.
Got it thanks again, thank you.
The next question comes to mind Mcwilliams with Barclays. Please.
Please go ahead.
Hey, guys. Thanks for taking my question, So David after Spain, and a number of public warning ones in Europe. So far you know how do you plan around building around these opportunities to capture the enterprise wins and these now everbridge covered geographies.
Yeah, Ryan. Thank you for the question. We've we've learned over the years for example in this state of Florida. When we won the statewide deal for the state of Florida over the years, we've gotten to the point, where we have 67 67 counties hundreds of cities around.
60 corporations air airports train stations University's health care facilities.
We built a regional resiliency ecosystem around that statewide deal and it's very <unk>.
[noise] you added for our customers to be part of that ecosystem and we're seeing it now in California, and New York and some of the other statewide Ah deals that we've won and we see it also with the countrywide deals. So if we just do our normal things you know over the years that will develop and what we've done is put together playbooks to try and accelerate what.
Will happen what would happen naturally so and some of the countries that we've already won we're running tests and doing different types of outreach to try to accelerate this network effect that we can get when we when the countrywide on a statewide.
Mass notification deal. So we do have players that were running on that and I think we're getting better and we're learning and it's something we're really optimistic about as we go into the future and we're not just limiting it to the European Union by the way I mean, we're we're talking to countries all around the world and so obviously the EU mandate is an important cattle.
[noise] was there, but more and more.
Creating standards for how this should be done and and really it makes sense for every country to have this type of capability given the overall risk profile, whether it's coming from natural disasters extreme weather events cyber all of it. So it's an area that we're very excited about in terms of kind of building a moat around the business for the long term.
Thanks, Yeah, I think the New York City housing authority when can't smoke to that and then exactly with just one Patrick from the billing standpoint, I know things can be really lumpy and now you can't force countries to you know exactly the way you want but just on the ones in the corner any seasonality and anything to call.
[noise] out there versus the prior quarter and then maybe no R. P O.
How 'bout did in the corner as well.
Sure. Thanks Ryan.
Yeah individual quarters calculation of billings will be subject to a lot of noise seasonality can sometimes play a part, but just just the timing of transactions and the renewal of the transaction et cetera will create noise will continue to focus.
Focus people towards that they really want to look a billing which is not a great metric for for understanding our business, we'd say look at the trailing 12 month change in billings, which was up 42% year over year that billing still doesn't <unk> amongst the noise or.
Or the the things that don't even show up in billings are the deals that we've signed in the quarter that we've not yet and voice for and that includes some of the countrywide wind and that's that's in Uninvoiced backlog of that's still sort of in the mid teens of millions of dollars.
And are P. O is what we would encourage folks to to look at before doing the billings calculation that ends up year over year by 36%.
The current version of subscription account.
Uhm three six.
Okay.
The next question comes from Willpower with Bird. Please go ahead.
Great. Thanks, I guess, a couple of questions you all reference that the record number of 500000 plus.
Plus deals What'd, you just get more color on what's driving the increasing traction there seemingly each quarter I mean does it does it companies taking you know more modules as a tight added distribution that has a greater upmarket. Okay. It's just I'd love to get more color as to what's driving a large or a large deals.
Yeah, well. Thank you great question, so it's multiple factors.
One is that we have been trying to sell higher into the organization. So if you start by selling into the sea Sweet and you know if we can into the the board even.
That helps helps you drive bigger deals too is Ah various bundling strategies, you know a lot of our competitors are selling point solutions and so one way we compete and try to avoid competing on price is by putting together a bundle of capabilities that it's difficult for them to match because they just don't have those capabilities and.
And that's why you see we've been pretty aggressive with our strategic product roadmap building out into new Adjacencies and I think that's been really helpful. As we're going and trying to drive up the ASP.
And then also there's just a higher awareness level of the importance of critical event management and overall resilience and an organization coming out of Covid and I think that does help us quite a bit. So it's a variety of factors, but it's clearly a trend if you look over the last several quarters and then some.
Thing that.
We're going to continue to try to do more and more of.
Okay now I'm Gonna ask you a question on the EU fraud, I guess, maybe Spain in particular looked like a really nice when I know you'd noted you know that was a competitive process.
I'd like just some more color as to what you think set you apart from the other competitors both both the front end and back end and I should think about competition for some of these other you deals you know how 'bout those different from what you, perhaps solid spain or or not.
Yeah. Thank you so.
We have we had the world's leading best solution for location based SMS version of public warning.
And then we acquired one of many which had the world's best solution for the cell broadcast modality of public warning and we've built an integrated hybrid front end that supports.
Multiple modality public warning and we've filed for IP protection and we have that now patent approved its launch it's going it's going in with some of these new ones that were getting and so.
We think we have the best in our opinion.
We think we have the best product, we think strategically about having a hybrid platform that supports all modalities that helps.
We have more integrations and anybody, particularly around five G. In it type of modalities people Wanna do multimedia messaging that sort of thing and then for some of these countries. They want to know that they were going with a a partner. He has the bench strength to actually get the solution integrated and delivered cities are very large scale complex.
Implementations in some cases and I think Australia is a great example, where you know it.
It was very public it's very high profile for the country and it was a big deal to get the to go live with Australia. This past quarter and it's very high Stakes in terms of the use cases, if you look at the bush fires and some of the other.
Safety areas that this is used for in Australia. So I think the fact that we've got so many implementations I think we're sort of the safe choice and we can also be relied upon to help really manage and drive the implementation in a timely manner and we've gotten that feedback as well.
Okay. Thank you.
Thank you. The next the next question comes from Parker Lane with Stifel.
Please go ahead.
Hi, guys. Thanks for taking my question I think it's been about six months since you acquired X matters love to hear about the joint selling motion between you and I'd be alerting solution and X matters and the progress of some of your existing customers taking on some of the capabilities you acquired in that deal.
Yeah Parker thanks for the question.
We're getting great feedback on this concept of a digital physical fusion center, where you can manage your risks across both with a single pane of glass and a common operating system and.
And I think it's the wave of the future and you know the lines blurring you see something starts with a ransomware attack and all of a sudden.
People can't get gas at the gas station and it goes back in for a physical the digital digital or physical so it makes sense have one one vendor partner that can support that across everything.
So I think people are resonating with the message obviously with the ex matters platform. It was many years of development really nice system.
Her face functionality use cases.
Digital operations, it's it it really adds a lot of capability to what we were doing with our I T alerting and we're already doing integrations right. So we've got that integrated now with our crisis management module, we've got an integrated with our employee communications module integrated with our visual command center. So people are seen.
The value of it coming together over time, and giving us really positive feedback.
Great and none of the broader enterprise opportunity you know relative to pre COVID-19 held the sales pitches changed across the vertical as you're playing it I mean, some organizations are going back to you know the office others are doing pulley remote workforces going forward can you just talk about how the actual sales pitches change it in the the value.
[noise] proposition, you're trying to drive for customers you know higher communicating that in this new world.
Yeah. So one thing that stayed constant is Roy.
Roy so.
They are I use cases are going to sell well forester.
Forest or came in and did a study and talked to a bunch of our customers and said there's a I.
I think a four month payback period for Cen. So if you can do or is it helped to enable revenue or help them to run their business more efficiently.
And then you kind of fund the insurance policy piece of it that's really compelling as a retail customers have been reopening their stores, we've been helping them with that that's enabling their revenue.
More and more reliance on digital so the IP alluring.
C N for digital in terms of.
Reducing downtime is a very easy Roy case cause it's so expensive to have that downtime. So that's really important as far as specific use cases.
Now people are very focused on workplace of the future. There is a lot of competition for for talent in hiring and companies are having to be more flexible in terms of how they support their work for us and let them work remotely and have hybrid models from that perspective, and it definitely our system built around.
Safety connection is really built to do that so the work workplace of the future initiatives.
Really well with what we're doing and we're definitely emphasizing that in the sales and then most recently you were saying and just recent weeks in the last few months travel business travel is coming back with a vengeance and people want to make sure that they're doing everything everything they can to mitigate risks around business travel. So that's an area, we see a lot of opportunity.
<unk>.
Very helpful. Thank <unk>. Thank you.
The next question comes from Brian Peterson with Raymond James can you just go ahead.
Hi, Thanks for taking my question. This is John Latino on for Brian David I know that the partner channel has been something that's gotten a lot larger focus since you joined and it's good to see Deloitte added as a partner in a meal, but maybe give us a little more color on the broader efforts there and how those are progressing and where do you think those efforts are as <unk> as far as full potential.
Shall a breath of expansion there.
Yeah, John Thanks for the question.
Want to have multiple routes to market in multiple ways to drive distribution. In addition, adjust the direct salesforce that we've always had so there are different categories of partners. We've got global system integrators, and we've got other products ecosystem partners.
We have hundreds and hundreds of integrations and so where we have a technical integration. We tried to also turn that into a go to market partnership we have agent community.
And then.
We have industry vertical specific partners for example, we announced a partnership a few quarters ago, where we're going and helping with critical infrastructure around nuclear power plants that sort of thing. So all of these really helped to drive overall dealflo a number of at bats, and so sometimes it could just be a referral and sometimes it's going.
And as a whole package deal and I think also we had a question earlier about big deals and a lot of cases. Some of these deals are bigger than our average deal for example, our largest.
Contracted state of California, and that came as part of a partner deal with a global partner in a couple of cases now we've gotten partners to sign up for reasonably.
A reasonably significant annual minimum commitments and and that always helps too and it shows their confidence in their ability to help so what we have and then.
More and more you're saying, we're partnering with professional services type firms, where there's very little overlap, but they're going in and a consultative basis in helping advise enterprises and then for them. It's a natural extension to say.
A lot of these best practices are supported by this industry, leading SaaS platform from Everbridge and by putting that in you can you can make a lot of these improvements so.
So that's a good said I think in terms of where we are an overall progression we've built out our partner portal in our processes and our our whole way we support partners.
It all had to be stood up over the last year or so now I think we expect to see it start to accelerate more but I think it's still.
Second or third inning in terms of what it could potentially be at the end.
Perfect. Thank you very much.
Thank you.
The next question comes from co G. A qaeda with Bank of America. Please go ahead.
Hi, Thanks for taking my question it is accurate and Lori North Connie book Cokie.
Just wanted to follow up on that pop only comment previous name <unk>.
I was wondering what is the current average chronicle customer and could you remind us how how that has trying to since I P. L.
Hi, Laurie. Thank you for the question, Yes, we think it's a big growth opportunity for us the average number of products for a customer.
Is a little below too so.
We probably at 11 different products that we can be selling so we see a lot of opportunity now with over 6000 enterprise customers.
Two to cross Alan up cell and so we see that as a big growth driver for us going forward. Thank you.
Great. Thanks.
The next question comes from Brian call Your with Stevens. Please.
Please go ahead.
Hey, guys. Thanks for taking my question.
So I wanted to ask about X matters I'm curious how the increase in ransomware attacks kind of impact in the pipeline for the ex matter solution and and also how is how is X matters performing from a top and bottom line perspective relative to your initial expectations.
[noise] yeah. Thanks for the question Brian B.
We're not a cyber company, we don't compete with those companies, but when a cyber attack does happen it becomes a critical event and so.
We really work hand in glove with with the companies that sort of protect the endpoint.
So as you see an increase that does affect things like digital operations that effects.
Uptime.
And overall productivity and then that fits squarely in the Cen category. So it definitely allows us now to go have more robust and better conversations with well funded.
Persona is like the C I O.
CTO of an organization so from that perspective, it's been very helpful. Overall, we're not really breaking out the X matters.
Because we had an existing business and we're kind of kind of put those things together, but I think overall X matters has been kind of what we expected I don't know Patrick this and where you want to add on that.
No to your point.
Performing as expected we've integrated the people we've been upgraded the sales we've been agree with the funnels for integrating the technology. So we don't break it out but so far so good.
Got it that's helpful.
On the public Morningside I'm curious how quickly do you think some of these larger ones like Spain will translate into expansion wins within the country with enterprise customers or other.
Other municipal customers.
[noise] well we.
Where we're going to spread the word Asap and it just helps you know when you go and say that the.
The country is that.
And an extensive RFP process and we were selected and were powering and I mean, we see it in the United States, where we have.
Several hundred municipalities and their fallback system is.
The federal government, which we also helped to power as well and so it just.
It's just a natural conversation at least from a marketing and sales perspective, and sometimes there's there's other benefits as well so.
It's probably in some of these countries, we had better sales covers and others. So in some places we need to go and hire more salespeople to get better coverage.
Where we have where.
Where we have better sales coverage like in Australia, we are seeing deal starting to come through from that and then in other places would probably just need to hire some more salespeople.
Got it.
Patrick just a quick housekeeping question for you can you provide the breakdown of professional services revenue versus software license and subscription.
[noise] I can you know that's in our.
Q, which we filed concurrently.
And I could I could follow up with you after that but it's definitely it's.
It's it's been published to our website and file.
Apologies thanks for the time guys nowhere.
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.
[noise] well I just wanted to thank everyone for joining our call today, where.
We're excited about our consistent execution, which drove results that exceeded our guidance and we're looking forward to closing out a record year as we continue to leverage our market leadership to penetrate the multibillion dollar opportunity. We're addressing we hope to see many of you at the Stephens and credit Suisse conferences over the next few weeks. Thanks again bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[noise] [music].