Q4 2021 Everbridge Inc Earnings Call
Good day and welcome to the ever Bridge fourth quarter 2021 earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays 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.
I would now like to turn the conference over to Patrick Brickley. Please go ahead.
Thanks, Good afternoon, and welcome to everybody just earnings conference call for the fourth quarter and full year 2021. This.
This is Patrick Brickley, Executive Vice President and Chief Financial Officer of ever Bridge and interim co CEO .
With me on today's call is Vernon Irvin Executive Vice President Chief revenue Officer, and interim co CEO .
After the market closed we issued our earnings release, which can be accessed on the Investor Relations section of our website at IR Dot <unk> 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 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.
On today's call Vernon will review, our business highlights and I will provide more details on the financial results and then we will open up the call to Q&A.
With that let me turn the call over to Vernon.
Thank you Patrick and thanks to all of you for joining us today.
You know Patrick and are acting as co Ceos, while the company conducts a formal search for a CEO .
We've engaged a search firm.
But optimizing for talent not experiencing.
Since December Patrik, and I, and the board and executive team.
Conducted a holistic review of our strategy operations and execution.
<unk> has built a strong foundation as a leader in critical event management, and we're taking actions to improve on our strategic direction.
Go to market execution and efficiency being sure that we deliver solid profitable growth and generate long term value for our shareholders.
On today's call I'd like to discuss our fourth quarter results and outline actions that we're taking to refine our strategy.
In order to better focus and align our organization to meet the multibillion dollar opportunity we are pursuing.
We will be discussing how these improvements are.
Inform our guidance for 2022.
Our ability to drive sustainable revenue growth, while also meaningfully expanding our profitability and positive cash flow.
Looking at our reported results, we delivered a solid fourth quarter revenue of $103 million up 36% over fourth.
Over Q4, 2020, and adjusted EBITDA of $6 million for.
For the full year 2021 revenue was $368 million.
Up 36% from prior year, and adjusted EBITDA was $11 million up 39% from 2020, reflecting our ability to drive leverage in our model.
These are solid headline numbers driven in part by another strong quarter for critical event management that we referred to as CDM.
However, before I dive into further into the Q4 results I want to make a few minutes to discuss the elements of our recent execution that we're not strong.
As we would've liked.
Actions that we're taking currently to drive to address these in 2022.
As I noted on the onset beginning in December our management team together with the board conducted a comprehensive review.
Of our strategy and operations.
We identify specific elements the performance from certain acquired technologies.
<unk> barrier to upsell and cross sell from increased complexity and incomplete integrations and pushed out demand for travel related solutions.
As well as smaller deal size for international public warning wins.
That are having an adverse impacts on our business our go to market strategy and sales organization.
Informed by review, we're taking decisive actions to address the root causes of these issues.
Patrick will discuss in greater detail, but the net impact of these changes will it be to simplify the business, which will result in milk term trade off of revenue growth.
But provide an attractive sustainable long term growth trajectory.
Improved profitability and positive cash flow.
The first one highlighted in my review really relates to the number of acquisitions completed in 2020 in 2021, which will provide us with a stronger overall cm solution to power our long term growth.
However, these products and businesses have created incremental product line complexity that produce integration challenges.
Complicated our go to market efforts.
With incomplete integration into our <unk> platform, it's been harder for our customers to take advantage of our new technological capabilities.
And for our enterprise sales organization to execute on our land adopt and expand sales strategy.
As a result, this year, we'll be focusing on integrating and simplifying our cesium solutions to focus on key customer personas.
In addition, we will be deemphasizing M&A this year.
This focus on integration will allow us to simplify our product messaging strategy as.
As well as enable our enterprise teams to be more effectively sell our greatest asset.
A more robust and integrated industry, leading CGM platform.
The secondary highlighted in our in our review involved the continued maturation of our international public warning marketplace.
I should remind you that we defined public safety is a combination of our core mass notification solutions.
And are successfully integrated international whole country public warning solutions.
Both of these are industry, leading and being chosen by more U S States federal and state agencies and governments in multiple countries around the world.
The any of our competitors power.
However, recent international market activity Youre seeing meaningful contraction in the size of countrywide deals as compared to the wins that we are seeing over the past couple of years.
These deal side contractions, coupled with elongated public morning implementation timelines suggest to us that our near term wins for large and medium sized country wide public warning deals will be smaller than previously estimated.
That said, we expect to continue our heart when rates and public warning.
And the network effects that further expand the opportunity.
So let's explain the three main actions that were currently taking to improve the execution issues as well as the expected impact.
First we are pausing material, new M&A and instead prioritizing development efforts to focus on accelerating product integrations across our existing acquired assets, allowing for greater competitive differentiation.
Simplification and lower cost.
For example, the strategic work, we've done to integrate <unk> Iot management and snap comes employee communication technologies into our CDN platform.
Both contributed to large <unk> wins in 2021.
To extend this success to other acquisitions, we already are accelerating the integration of our acquired digital solutions.
And our acquired travel risk management solutions into see him.
Next we're simplifying our product offerings moving from several dozen individual product point products to focus on four strategic <unk> solutions, each targeting a specific buyer persona with a unique and differentiated technology solution.
Thank you for digital is a single package that solves problems CIO space.
Senior them for business operations includes 911911 and travel risk components to focus on enterprise resilience for chief risk officers.
And senior people resilient serves the need for chief security officers and their duty of care concerns.
Finally, CGM for security helped CIO, and CFO secured government and enterprise Iot assets to protect people and facilities.
These integrations will significantly.
Simplify our go to market process and drive higher productivity over time.
In the short term. However, we expect this to create a revenue headwind as we deemphasize some small non strategic.
Products.
Glass and the public warning market, we're going to continue to leverage our industry, leading win rates to drive land and expand opportunities as.
As well as apply increased focus towards driving network effects that.
Multiply the opportunity inside our region once we start to penetrate it.
As you would expect these factors impact our current 2022 revenue outlook, which Patrick will discuss in more detail.
While these headwinds are disappointing, we believe that increasing our focus on product line integration.
Simplifying our enterprise go to market motion will better leverage our most productive strategic and mission critical solutions to drive topline growth that is attractive.
Sustainable and meaningful more profitable meaningfully more profitable.
So, let's talk about our fourth quarter and a little more detail overall, we saw continued momentum in our core strategic opportunities with 19, new growth senium deals around the world.
Recent events that include the crisis in Ukraine threats of cyber attacks and criminals on global assets. The recent past incidents in the Texas synagogue.
Wildfires in the West coast and the ongoing global supply chain disruption highlight that our mission has never been more important.
<unk> continues to be involved in their most critical events around the world impacting both public and private organizations to keep people safe.
And business is running.
Organizations are responding to duty of care and desire for operational resilience by turning to ever bridge.
In 2021 customers rely on ever bridge over 6 billion times throughout critical situations to ensure their most important assets are safe and continue to ongoing operations.
New customers that selected <unk> in the fourth quarters included global customers such as U S software leader PTC in light of us.
The defense and aerospace leader, formerly known as SAIC.
Light OS is a Virginia based defense Aviation Infotech, and Biomedical Research company that provides engineering systems integration and technical services.
As a new <unk> customer lineup selected CGM and crisis management offerings to bolster their business continuity and emergency management efforts before during and after contingent crisis.
<unk> was also selected by the largest online marketplace in South Korea, and a leading American bedding manufacturer just to name a few examples.
The bidding manufacturers selected <unk> because of the value of its derived by applying our industry, leading situational awareness to accelerate his response to disruptions impacting its 5000 team members.
Is 600, plus store locations and assets moving between them.
We also continue to track records of expanding relationships with existing customers.
Including a multiple global.
Pharmaceutical leader, who expanded their use of <unk> implementation.
In addition, the largest bank in Canada RBC financial group.
And the U S Department of Treasury, where among customers to increase their ever bridge commitment to become <unk> customers.
Specifically the U S Department of Treasury, which is one of the more than 80 federal agencies using ever bridge.
Our risk intelligence solutions to full C. M in order to have a robust common operating picture.
All treasury locations.
These transactions in Q4 represent our land and expand strategy and.
And we believe that we will simplify our simplifying our CDN packaging messaging and go to market. We will continue to expand this success in 2022.
In the area of public warning really we are well positioned to continue winning a significant amount of public warning opportunities with our industry leading platform.
We will expect a slowdown in revenue growth from public warning. This year as a result of smaller deal sizes.
Believe we will see a continuation of our high win rates.
For all public warning opportunities as well as the resulting network effect opportunities will expand our growing presence in Europe and around the globe.
We're already repeating that success, we've seen in the U S like Florida, New York as well as countries like Singapore, Norway and Sweden.
Where we have since won more localized network effect deals such as the fee is Stockholm and a top employers within the city.
As you'll recall in the third quarter, we announced the countrywide public warning win in Spain.
And in the fourth quarter global insurer not free it's Banja based in Spain with a presence in 45 countries selected ever bridges mass notification solution.
Following our successful deployment of National public warning systems in the United Kingdom last year in Q4, we secured several enterprise banking and local government customers throughout the country in cities, including London, Bristol and part of.
In India the network effect from public warning contracts in four states led to contracts with NASDAQ listed global analytics and digital solutions Giants like EXL, India.
As well as with Badger financial our financial services and insurance company with over 20000 employees across 1400 locations.
These examples are powerful network effect illustrations why we remain optimistic that we can expand our public warning business globally and driving enormous strategic value from it.
Even with smaller countrywide wins now and in the future.
Now turning to some more specific business metrics from the fourth quarter.
We added 125 net new customers in the fourth quarter, ending the year with 6135 enterprise customers.
As I mentioned 19 customers were selected.
<unk> selected our expanded to our CGM platform, bringing the total number of CGM customers to 192, that's up 50% from a year ago.
Our momentum with large transactions. This year continued in Q4, resulting in a trailing 12 months asps that were again above $100000.
Contributing to ASP growth were 66 deals worth more than $100000 per year, tying a record performance from a year ago.
From a product mix perspective, 58% of our new and gross sales over the last four quarters came from new products as we continue to see demand for our newer applications.
As well as our core mass notification.
Our international revenue mix was 34% of the quarter and.
And as we continue to win business, both at home and abroad.
Compared to 28% year ago, we expand our presence in every major region around the world.
Our revenue mix by vertical remained relatively consistent with 68% from corporate.
23% from local state and country wide government.
And 9% from healthcare reflective, reflecting strong growth in corporate market with increasing post vaccine use cases.
As always we remind that these quarterly metrics can fluctuate.
So that longer term trend continues to reflect our overall business growth.
For the year, our applications managed a record $6 9 billion critical interactions.
Demonstrating our scale.
Resiliency.
And market leadership.
So overall the fourth quarter financial results were strong driven.
Driven by continued success of our core strategic market of CGM.
However, there were some aspects of our business that are not performing as originally expected spin.
Specifically complexities introduced by rapidly rapidly expanding port portfolio negatively impacted our enterprise go to market performance.
This coupled with our strategic public warning business experienced lowering asps.
And longer implementation time is influencing our current revenue outlook for 2022.
We've conducted a review.
Identify the core issues and are taking immediate actions to pause material M&A.
Streamline integrate.
And reduced complexity as I discussed.
While this will create some near term disruption, we strongly believe that with our market leadership and differentiated technologies. These actions will drive attractive sustainable revenue growth with meaningful increase in profitability.
And positive cash flow.
Now allow me to turn the call over to Patrick for more details on our financial results our guidance for Q1, and our operational focus in 2022.
Patrick.
Thanks, Brian .
As Brendan said, our board and management team are in alignment on the initiatives, we are putting in place to focus on <unk> growth.
Through integration and simplification and on optimizing our approach to the public warning strategic opportunity.
It is important work for the company and we are being very thoughtful on the potential short term headwinds.
Currently we estimate a total impact on revenue of $32 million this year, which is reflected in our guidance.
While these actions are disruptive in the short term. We believe this will ultimately enable the company to deliver attractive sustainable profitable revenue growth and long term value for our shareholders.
Can you break this down a bit more.
First as we discussed with the volume of M&A in 2020 in 2020 . One we now offer the broadest and deepest set of technologies in our market.
However, these additions have created complexity for the business seen in product.
Back office and go to market headwinds that are obstacles to sales growth.
Removing these headwinds by accelerating integration work will be our focus in the first half of this year.
At the same time, we are using this opportunity to deemphasize certain smaller non strategic products that don't fit cleanly into our CGM and public warning focus areas.
While these products do deliver some standalone revenue they are a distraction to our primary focus and negatively impact our sellers overall productivity.
We estimate that impact from these combined factors to be roughly a $17 million headwind to 2022 revenue.
This is based on work we've done in the last couple of months.
As well as our Q4 sales performance some of which was not considered in our preliminary guidance for the year.
Second in the public warning market additional clarity on recent countrywide pricing trends in certain markets.
And elongated implementation timelines.
Where we expect the other $15 million of headwind in 2022 versus our previous expectations.
We are taking decisive actions to address these two areas over the next few quarters I am confident the result of these actions will be to focus on building sustainable long term growth.
At the same time this will enable us to be much more profitable with a meaningful increase in adjusted EBITDA in 2022 on both a dollar basis as well as on a margin basis.
And should also position us for strong margin leverage beyond this year.
With that backdrop, let me summarize our guidance for the first quarter and full year.
For the full year, we anticipate revenue to be in the range of $426 million to $432 million representing.
Representing growth of 15% to 17%.
We anticipate adjusted EBITDA will be in the range of 33% to $35 million tripling from 2021, and representing an initial adjusted EBITA margin of 8% we.
We expect a non-GAAP net income of between 10% and $12 $2 million or between $22 26 per share based on 47 million diluted weighted average shares outstanding.
For the first quarter, we anticipate revenue of between 98, 8% to $99 million representing growth of 20%.
We anticipate adjusted EBITDA will be between negative $1, nine and negative $1 5 million.
And we anticipate a non-GAAP net loss of between negative seven one and negative $6 7 million or a loss of between $18 17 per share.
One important note about our Q1 revenue guidance.
Many public warning deals are recognized upfront upon implementation.
We completed a number of implementation milestones and recognize that corresponding revenue in Q4.
Due to this timing, we expect revenue from public warning to be down sequentially in Q1.
And this impact is reflected in our first quarter guidance.
Before we open up the call for Q&A, Let me quickly run through a recap of Q4 and full year performance.
Unless otherwise indicated I will be discussing income statement metrics on a non-GAAP basis.
Reconciliation of GAAP to non-GAAP measures has been provided in the earnings release, we issued earlier today.
Q4 by itself was solid with revenue of nearly $103 million up 36% from year ago.
Gross margin increased to almost 74%, reflecting leverage as our business scales.
Our net retention rate continues to track at or above 110%, reflecting continued customer satisfaction combined with demand for additional ever bridge technology to expand within the existing customer base.
Adjusted EBITDA for the quarter.
Was $572000 and net loss was negative $2 1 million on a GAAP basis, our net loss was negative $10 5 million.
For the full year 2021 total revenue increase.
36% to $368 million with gross margin, improving 130 basis points to 73%.
Finally, adjusted EBITDA grew to $11 2 million for the year, an increase of 39% from 2020.
As I said earlier, we expect to significantly increase profitability in 2022 as efficiencies are realized.
Our balance sheet continues to be very healthy we ended Q4 with nearly $493 million in cash cash equivalents and restricted cash reflecting the impact of the cash paid to acquire anvil offset by positive operating cash flow of $10 million.
From a capital allocation perspective, we are focused on organic investment opportunities in 2022, consistent with the key programs that <unk> discussed therefore.
Therefore, we do not currently anticipate significant used for M&A.
We will evaluate other opportunities to deploy capital, including repurchases of stock or convertible debt as the year progresses.
In summary, we delivered a strong performance in the fourth quarter and all of 2021.
As we look to 2022, we're very focused on execution.
<unk> organic growth and maximizing past investments.
Looking further we believe we can deliver attractive sustainable topline growth with improving profitability and positive cash flow, which can generate significant long term value for all of our stakeholders.
Now operator, we're ready to open the call for questions.
Thank you 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 to withdraw your question. Please press Star then two.
Please ask you limit yourself to one question and one follow up if you have additional questions you may reenter the question queue.
At this time, we will pause momentarily to assemble our roster.
And the first question will come from Terry Tillman with Truest. Please go ahead.
Yes, thanks for taking my questions good afternoon.
Vernon and Patrick the first question is on the I appreciate you breaking out the two key areas of this big revenue shortfall 15 million in public warning market side I wanted to focus on that first.
It seems like a public warning systems are more important than ever.
So is this a struggle to articulate the value of what you all have because you brought a lot together here in terms of the platform capabilities. So it was there just a struggled articulate the value is there any kind of competition dynamics that are just kind of creating price dynamics or is the budget issues. Just anything more you can share on the international side Republic warning than I have.
Follow up.
Hey, Terry its Patrick Yes, recently, we've seen a contraction in deal sizes in part because of competitive behavior.
Sure.
Range of competitors are seeing.
Seemingly over committing and under charging in selected markets.
To secure share, which we believe is unsustainable over the mid term.
And that contraction and deal sizes have been exacerbated by the lingering effects of Covid, which is elongated implementation timelines.
Feel that we continue to be very well positioned to win long term because we have the technology.
And the reliability and the reference ability necessary for critical applications and in addition, this is a strategic opportunity for us and helps us to lay the foundation for network effects.
So we still see a tremendous strategic opportunity for us here.
Despite these recent trends in the market.
Okay. Thanks.
Thanks for that Patrick to follow up maybe Brendan for you in terms of there is a meaningful increase in EBITDA. So I guess, that's a constructive dynamic and youre going to pause the M&A, but confidence in terms of stabilizing kind of the go to market side and like what's going on with the sales capacity how is the churn of the sales team.
And are you investing less in sales head count.
Been overcapacity just more on just trying to understand the stability of the sales force amid these various actions and initiatives. Thank you.
Sure and thanks.
Terry.
I said in my prepared.
Comments.
In terms of areas of complexity.
We had a number of acquisitions, obviously throughout the year and that really added to the complexity of both the back office and the product platform.
And that complexity was extended to our customers and to our sellers.
And as a result of that obviously, we saw a.
Slow sales results in Q4.
And as I said also in my prepared comments one of the things that we're doing now is.
Prioritizing the integration of those technologies, so that we could actually also take those key differentiated assets and provide a differentiation in the marketplace.
Set of very nice bundles that are persona base.
So if you're a CIO or CFO or <unk>.
Have a bundled solutions that are part of the Everbright <unk> solutions and what that's going to do is make it simpler for our sellers to sell it.
It can make it simpler for our customers to buy and we believe that that pivot is.
There's going to be very important towards sustainable long term growth for the company and Thats work that both Patrick and I kicked off over a couple of months ago.
Thank you and the next question will come from Ryan Macwilliams with Barclays. Please go ahead.
Okay.
For taking the question Patrick you had the initial guide of 20% to 23% at the time of Davids departure and it looks like a solid fourth quarter can you just talk about maybe what changed in December like some puts and takes from their view that now has shifted every British strategy focusing on EBIT profitability unless on revenue growth.
Acquisitions and is there any changes on how you view the growth rates in your core mass notification and <unk> end markets.
Hey, Ryan Thanks for the question, Yes in December we provided preliminary guidance.
It was.
Based on the model and strategy in place at the time.
And since then Vern and I and the board have taken a hard look at what we are doing well and what needs improvement.
And the actions that were taken to integrate.
The recent acquisitions simplify the CGM solution.
Optimize our approach to public warning.
These are all going to drive more moderate near term growth, but also higher profitability.
And we think a midterm growth profile that remains strong and attractive and again with significant profitability.
We've done our bottoms up planning to come to this view and have a strong confidence in our guidance.
No I appreciate that color and then towards.
Towards the end of last year, you had the acquisition of Anvil.
For $160 million can you just help us out with maybe how fast it was growing.
What that revenue contribution might be for this year and then when it comes to which point solutions Youre planning to deemphasize any more color there and like I have any particular acquisitions, maybe underperformed your expectations. Thanks guys.
Sure.
As it relates to Anvil Anvil, it's largely services driven and.
In terms of revenue growth and.
<unk>.
With <unk>.
Covid and the impact on business travel market.
Anvil.
Performance Hasnt been as strong as it as it was historically nor nearly as strong as we believe it will be as business travel returns. So as we look at 2022.
There could be some upside related to anvil if business travel.
Returns relatively quickly.
And in terms of the.
The rationalization.
We're not going to necessarily unpack.
What we're doing.
And go through a specific inventory of those products.
We would just say that for context.
A number of the acquisitions that we did we're very.
It came with very strategic and core technology for us as we built out the CGM platform.
And sometimes came with non core technology and its those noncore technology pieces that we're focused on right now.
And so as we do.
Deemphasize those will work hard to minimize the impact on affected customers.
But naturally we anticipate that this is going to have a small impact on gross retention this year.
Which will we will lap and we will have out of the system in 2023.
Appreciate the color thanks, guys.
Yes.
Thank you and the next question will come from Brian Peterson with Raymond James. Please go ahead.
Bryan. Please go ahead, perhaps your line is muted on your end your line is open.
Sorry about that guys.
He has hit the mute button again, but hey, thanks for taking my questions. So Patrick I wanted to follow up on that last question in terms of the $17 million impact could you maybe give us a little bit more color specifically on what youre doing with those products or those basically getting end of life and so the customers will essentially be turned off.
And when is that actually happening as we're thinking about 2022, where we showed that the linearity hit in the first quarter first half.
How should we be modeling that impact.
Yes, well.
So first hey, Brian Thanks for the question.
That the $17 million headwind that we're associating with.
With M&A.
Really.
Is too full there as the go to market impact and there is the rationalization impact.
And so just to break those down in terms of go to market, we were well down the path of selling dozens of solutions that were not always tightly integrated and we are selling them to multiple buyers and as Vern said that was confusing to customers and to our sellers. So the action that we're taking there.
To remedy that is we're focusing on integrating the acquisitions, we're simplifying our go to market, we're aligning and upgrading our back office to make it a lot easier to do business with and within.
Ever bridge and so.
The impact of that and it's part of the $17 million that showed up in second half sales.
Especially in Q4.
And the other aspect of the $17 million is the rationalization and as I said.
For acquisitions to work well it requires that you integrate the acquired products onto your platform as well as rationalize the smaller components that are not a good strategic fit and in 2022, we're focused on accelerating both of those and so it's a limited portion of the headwind that's due to rationalization.
And and that work is already underway and that's going to.
Already underway in Q1, and it'll it'll progress throughout the year.
Okay got it and maybe just a follow up on pricing I know you guys mentioned for some of the public warning solutions Youre seeing price points that are maybe lower than expected I'd be curious how are things looking maybe outside of that in terms of mass notification or CES I'd just be curious to get an update on pricing trends there. Thank you.
Yeah, So I think when.
When we think about public warning.
As we said earlier that.
We still have the leading platform for providing countrywide alerting for all of our customers.
<unk>.
That is shown as a result of our continued ability to continue to win both large and medium sized country deals.
Also continue to also win a fair amount of state local deals and mass notification and our resident connect in some of our other suites of solutions.
So as it relates to our public safety products most of the price compression we've seen exactly in the international public warning, specifically, but overall public safety pricing is holding up pretty well.
That <unk>.
Pricing pressures evident in the fact that they're highly competitive bids with lots of competitors.
And a pretty rigorous RFP process and even though that is the case, we continue to win them because we've got a leading platform, but clearly has put.
Put pressure on the pricing for our international public warning business.
Yes, and otherwise just to jump in.
We're not seeing pricing pressure in our primary growth engine of critical event management, and particularly as we continue to migrate towards more operational use cases that continues to progress well.
Understood. Thank you.
You bet.
And the next question is from Matt Stotler with William Blair. Please go ahead.
Hey, Brian Hey, Patrick Thanks for taking the questions maybe start with one on the pipeline so.
Obviously, a lot of a lot of things changing.
Management turnover, some strategic decisions being made.
We seem to make a lot of sense.
From a pipeline perspective, obviously you'd like to push the focus away from billings.
12 month basis billings growth was flat, but was consistent in Q4 relative to the year over year growth, we saw in Q3 and Q2.
Which I think is.
Impressive considering the maybe.
And efficiency that you've talked about the impact that had on selling in Q4, so we'd like to maybe just dig into what youre seeing in the pipeline.
Both with customers that are either coming up for renewal or new deals I mean.
And just kind of balance. These two things were the trailing 12 month billings performance and the performance in the quarter specifically.
Seems to be doing relatively well, but also you have these changes upcoming I would love to get some more color there.
Yeah. Thanks, Matt I'll go first and then I'll turn it over to Vernon.
As you know I'm, a broken record on the billings metric and.
Have recently been suggesting that folks.
Pay more attention to current <unk>, which you will see.
Our 10-K that the growth.
Year over year in current <unk> is about.
24%.
Which I think is probably a better indicator.
<unk>.
Backlog and.
As reflected in our guidance going forward, but you also asked about pipeline I'll turn it over to Ernie to talk about that thanks, Patrick and thanks, Matt for the question.
Look our.
Our.
Our direction around simplifying our product platform.
There is allowing us to get more proficient and also more efficient.
Speaking to our customers and our sales folks so.
As I think about the senior <unk> packages that Roberto.
<unk> for digital.
Focus on the CIO persona.
Laos us to very succinctly be able to communicate with their use case and media for that persona simplifies. The go to market for our sales folks and be able to actually fully utilize the pipeline we've got in place for that.
And then our second and equally as important as our senior four people resilience.
Around enabling <unk> for business continuity and security professionals in their organizations really gives us the opportunity to leverage our bundled solutions for that particular persona and as that round out some of the top four senior for business.
Our our business ops really helps us from a business continuity perspective, and a risk management.
And we're real excited about that opportunity for the marketplace, and then last but not least senior for smart security really enables the CSO and other security leaders to take full advantage of those pipeline and those solutions in a very simple bundled and was really attractive about it is we've got entry level capabilities in each of the bundles.
So we can sell a set of solutions that are easy to enter but allows our customers to be able to migrate up to a full <unk> solution. So again, simplifying the platform, making it usable for our customers and more consumable while at the same time, creating a great deal of simplicity and simple.
The case not only in go to market been in comp plans and the way, we do business and it's something that both Patrick and I are excited about for 2022.
Got it got it that's helpful. And then just a follow up on the on the partner ecosystem, obviously, the billing that I'll spend a.
Our focus in the past couple of years.
How are you thinking about the initiatives there going forward, how those learned to the strategy for 2022 and beyond and.
Initial early feedback from your customers on the bundling and strategic changes that youre, making.
Yes.
I think the.
When we talk to our customers and we try to do that pretty often in our top sales folks.
We are now very actively being able to know what I call operationalize the partnerships that got signed last year.
We're excited about those partnerships both in Americas and EMEA.
In Asia Pac are now beginning to work very closely together with our direct and indirect sales organization. So reactions to the bundling and the packaging that feedback from our partners has been very very good.
<unk>.
We received very well in the fact that now they can simplify what they have to deliver to their customers many of our.
The partners that we sign whether it be deloitte or pwc are having meaningful conversations at the sea level with many of our existing customers around resilience.
<unk> empowers resilience.
So these <unk> bundles really aligned very nicely with what's going on in the marketplace and with our partners.
Got it and thanks again.
Yes, you bet.
And the next question will be from Scott Berg with Needham. Please go ahead.
Hi, everyone Congrats.
Continued momentum and thanks for taking my questions here.
I guess the first question.
Yes.
Many times in the last 45 minutes, just trying to understand the timing of when all this happened.
Allison the Q&A alluded to kind of what happened in the last two months here.
Patrick but when we think about the timing and when you saw some of these changes happen how should we think about the last two months unfolding.
That in the context of conversations I had with yourself and the prior CEO suggested you all kind of seeing some of these smaller.
Public warning deals as countrywide deals now for at least a little bit of a timeframe. It doesn't seem like it was completely new in the last maybe eight or nine weeks. Thank you.
Yes, sure Hey, Scott it's Patrick.
With public warning, we had seen pricing sort of all over the place and.
And we've shared that.
What we've seen recently is just a narrowing of that trend.
Just smaller dollar deals.
<unk>.
<unk>.
And much smaller than what we've experienced in the past.
And as.
As Vernon was describing the purchasing dynamics.
There is a timeline, it's very public a lot of folks are jumping in.
I think.
Potentially over committing that kind of thing so.
As we got through the end of the year and came into 2022 and look towards this.
This looming deadline.
We just see more and more price pressure and.
Okay.
And so it just is what it is it's a global opportunity for us.
Very strategic we're still very excited about it because it's a long game.
But we.
Yes.
Something that is going.
To come in a lot lower than our previous expectations for sure.
Okay Fair enough and then a follow up question is on the integration process lots of acquisitions I've seen have had different challenges or opportunities from the integration process, but given the review that you've done recently and the expectation that this is kind of it.
The year of the integration how should we all view year progress there a particular area.
You think in for timelines and some of these integration needs.
One month, one quarter, one year type of scenario help us understand that and then.
When you get to the other side, how will we see it outside of just general bookings in.
Maybe.
Thank you.
Okay.
Yes.
We will keep you updated as we go through this.
We're excited to go through this Vernon I jumped on this quickly as an opportunity.
Two.
Do some great things for the business for the long run to drive much more sustainable and profitable growth.
No.
The actions that we're taking are going to take a few quarters.
We've.
Set out initial guidance for the year, both top and Bottomline will.
As I think we make progress and as the success materializes, we'll continue to update guidance and.
Yes.
Any other developments occur.
We'll share those as well on these quarterly calls.
I'm sure, we'll get plenty of questions and plenty of opportunities to provide update.
Great. Thanks for taking my questions you bet.
The next question will be from Michael <unk> with Wells Fargo. Please go ahead.
Hi, This is Michael Berg on for Michael turn.
I wanted to follow up on Terry's question from the top.
Given the recent change in the.
International Global macro dynamics.
Is there anything thats, maybe as hap interchanges in conversations given what is perceived as.
Incrementally higher need and could lead to quicker implementation times for the public warning systems internationally that may not have incorporated the guidance or how should we think about.
Current events are playing out.
For that part of your business.
Yes.
Hi, Michael Thank you for the question.
We're certainly seeing that.
Our public warning go to market is certainly extended.
<unk>.
Throughout obviously, the EU mandate, but now expanding outside into other parts of the world.
They are still highly competitive in.
RFP oriented but.
We think we've got an amazing platform solution for that.
And I think overall I think a lot of countries are thinking about their resilience plans.
And so I can say that the pipeline is steady and the team is micro focused on making sure we win our fair share of the competitive wins.
But we haven't seen.
I think if I'm answering your question properly we haven't seen that.
The current marketplaces.
Change much so I think theres just some.
Some regulatory mandates in Europe that we win our fair share of and we think theres more to come.
Outside of.
EMEA marketplace, we are running into other opportunities that we think will be very successful.
Thank you and a quick follow up when you run into competition, how can we think about the competitive landscape.
A bunch of regional smaller designers or large cap companies.
Investors may be familiar with or how to think about who these competitors are.
Yes, I'll jump in first.
Our primary competition.
Continues to be.
Some version of sort of buy local but.
But that said.
Ed.
More and more folks jump into these.
And.
<unk>.
And it just it runs a gamut of sort of large technology companies with soybeans.
<unk>.
Sure.
Telco and other technology.
It's a really small companies that don't have much reference ability in the <unk>.
Face.
So these RFP processes run quick they ran hot.
And in some of them.
Especially in previous quarters.
You did.
RFP might.
Really geared towards price over technology, but we're still able to win despite being higher priced.
We're just seeing more and more rfps.
Wait even more and more to price as we get towards the <unk>.
Deadline at least for the EU mandate.
Yes.
It's important to understand the differentiation in our platform. We also not only just public warning, but cell broadcast which is an advanced technology and I think the combination of the two are integrated we did that integration work in a timely manner and I think that has made us pretty differentiated which is why I think many of our.
Of our.
Our customers are selecting our solution, albeit in a hyper competitive marketplace.
Thank you.
Yes.
And the next question will come from will power with Baird. Please go ahead.
Hey, guys. This is Charlie Ehrlich on for will thanks for taking the question.
I just wanted to ask again about the population alerting pricing pressure.
It seems like you guys feel competitors are lowering their prices a little bit too much but I guess I'm wondering.
If you think it makes sense for you given your network effects and whatnot to also lower prices to win a deal or would you rather sort of hold firm on pricing.
Just love to hear about your philosophy on that.
Yes, well thanks, Charlie for the question that is a dynamic that we've been navigating for the past few quarters as I mentioned earlier, we've seen pricing sort of all over the place.
We've seen large prices, we've seen small prices it is a strategic opportunity for us.
And more often than not we.
Alright determined to compete and sometimes we can we can alleviate the pricing pressure.
Just getting to the right people and explaining.
Our technology in the reference ability no. One has the reference ability that we do now has the technology that we do.
That said.
We've just seen some recent ones.
Sure.
Hits.
It sure seems like overreaching on price.
And there is a limit to which.
We will participate in some of those opportunities.
If at the end of the day, we look at the country and determined that that could be a significant player Sydney.
A significant growth lever for us over the next few years then.
We will think hard about it if it's if instead, it's the country that may not be a tier one opportunity for us.
Then.
We may decide not to follow the competition there.
Yes.
Some additional color Charley I think.
The way we are starting to think about that given the level of <unk>.
Competition is you can think of our winning these public warning deals as sort of a tip of the spear, we talk often about this network effects.
Program, where you can land a big country and do the work that we did in Spain, where we won the country, Spain, but then quickly went and won some additional mass notification business part of the Everbright suite in that country. So so from our perspective, we think that.
Landing those deals are important there will continue to be very highly competitive, but if we do our jobs with our product simplification, we think we'll be able to.
Increase our network effects over the long term.
Okay. That's helpful. And then just last question for me can you help us with the revenue and the profit linearity through the year as Youre, making these operational changes.
We expect Q1 profit to be the trough for the year or Q2 or any help on any of that would be great.
Yeah.
The profitability will grow throughout the year, and we would expect that by.
By the time, we're exiting 2022 will have an adjusted EBIT margin.
In the neighborhood of roughly 15%.
And.
With free cash flow following right behind that.
But.
Thats.
As we go through this simplification and rationalization will be.
We will be Repurposing our resources.
Most of which are fungible.
And.
So there is.
Well throughout the year, we will be working towards doing more with what we've got and that'll show up and leverage across the model, whether it's continued improvement on adjusted gross margin G&A as examples and certainly in sales and marketing.
Which 2021 was.
In the neighborhood of 40% of revenue and you'll see that as <unk> and team are doing a great job of simplifying our go to market, we anticipate that it will be more productive and more cost efficient and that will show up.
And our sales and marketing expense as a percent of revenue throughout the year.
Very helpful. Thanks, guys.
You bet.
And our next question comes from Parker Lane with Stifel. Please go ahead.
Patrick This is Matthew kicker for Parker.
First off could you talk a bit about the recent collaboration that you announced with Brown <unk> Brown.
What do you envision as the opportunity there as you start to expand into assisting the P&C insurance space.
Yes, I think.
The relationship with Brown <unk> Brown.
Really interesting.
Partnership.
We think that when you think about resilience.
Organizations are countries that need to look after the duty of care for their citizens are employees or assets.
Obviously these companies underwrite those countries and those companies and having a platform that powers resilience like RCM platform.
As a really nice fit together with brown, <unk> brown and going to market to make sure that there is.
Digital transformations Repowering resilience, if you will.
So therefore, there is an opportunity to obviously benefit from more flexible rates better options with Brown <unk> Brown, so that partnership feels very natural for US. It's early obviously, we just announced that we're looking forward to working very closely with them in the marketplace.
Okay, Great and then secondly.
How do you expect international expansion to kind of trend in the coming years.
Outside of the public warning, which products do you think have the highest potential over there.
Well again I have.
To go back to sort of prepare repaired remarks around the CDM packages.
One of the things that Patrik and I have done to prepare for 2022 and certainly a pivot in the last couple of months.
First thing is a pause on M&A activity.
Secondly, let's get the integration work done around the front office and back office and the product complexity out of the system with these bundles.
Those bundles are going to be extended to our international marketplaces, whether it be seeing them for smart city or CGM for business continuity or seeing for digital.
<unk> bundles simplified bundles are going to be made available to all of our markets. Both in Latin America, and EMEA and throughout the Americas. So.
Again, I think the the fact that we prioritize again pausing on M&A activity, but focused on making sure that the product integration simplicity gets completed for our customers is going to.
Provide benefits worldwide for our customers.
Okay that makes sense. Thanks, a lot for taking my questions.
You bet.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Patrick quickly for any closing remarks.
Thank you for joining our call today, we look forward to further advancing our position in the market in 2020 with more efficiency focus and clarity.
And we look forward to speaking with you again, thanks again goodbye.
Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Alright, thank you.
Okay.
Yes.
[music].
Yes.
Okay.
Yes.
Yes.
[music].
Yes.
Sure.
Yes.
Yes.
[music].
Yes.
Yes.
Okay.
Yes.
<unk>.
Yes.
Hum.
Yeah.
Okay.
Okay.
[music].
Okay.
Okay.
[music].
Sure.
Yes.
Yes.
Okay.
Sure.
[music].
Okay.
Okay.
Yes.
Yes.
Yes.
[music].
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Yeah.
[music].
Okay.
[music].
Okay.
Yes.
No.
Okay.
Yes.
Yes.
Yes.
[music].
Okay.
Sure.
[music].
Sure.
Okay.
Okay.
Okay.
Sure.
Okay.
[music].
Yes.
Yes.
Sure.
Yes.
Okay.
[music].
Sure.
Sure.
Yes.
Okay.
Yes.
Sure.
Yes.
Yes.
Yes.
Yes.
Thank you.
Yes.
Okay.
Sure.
[music].
Yes.
[music].
Okay.
Yes.
Sure.
Yes.
Okay.
Okay.
Okay.
Right.
[music].
Sure.
Yes.
Yes.
[music].
Yes.
Sure.
Yes.
Yes.
Yes.
[music].
Right.
<unk>.
Okay.
Sure.
[music].
Okay.
Sure.
Sure.
Yes.
Okay.
Okay.
Yes.
Sure.
Sure.
Okay.
Okay.
<unk>.
Yes.
Yes.
Okay.
Sure.
Okay.
Sure.
Sure.
Yes.
Yes.
Yes.
Sure.
Yes.
Okay.
Okay.
Yes.
Okay.
[music].
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Sure.
Okay.
Yes.
Right.
Sure.
Sure.
Sure.
Sure.
Okay.
Yes.
Sure.
Yes.
Okay.
Sure.
Sure.
Thank you.
Okay.
Sure.
Thanks.
Yes.
Okay.
Sure.
Okay.
Thanks.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Yeah.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
[music].
Okay.
Yes.
Okay.
Alright.
Yes.
Sure.
Yes.
Okay.
Sure.
Sure.
Sure.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Yes.
<unk>.
Yes.
Yes.
Thanks.
Okay.
Sure.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
[music].
Okay.
Yes.
Yes.
Yes.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Sure.
Sure.
Okay.
Okay.
Yes.
Sure.
Yes.
Yes.
Thanks.
Okay.
Okay.
Yes.
Okay.
Yes.
<unk>.
Okay.
Okay.
Sure.
Yes.
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Sure.
Okay.
Yes.
Sure.
Okay.
Okay.
Sure.
Okay.
Okay.
Thanks.
Yes.
Yes.
Yes.
Okay.
Yes.
Sure.
Okay.
Okay.
Sure.
Okay.
Yes.
Sure.
Sure.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Okay.
Yes.
[music].
Okay.
Yeah.