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spk03: Good day, and welcome to the Everbridge Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Joshua Young. Please go ahead. Thank you, Gary.
spk02: Good afternoon and welcome to Everbridge's fourth quarter and full year 2020 earnings conference call. My name is Joshua Young, Vice President of Investor Relations for Everbridge. With me on today's call are Jamie Ellerson, Chairman of the Board, David Meredith, CEO, and Patrick Brickley, Senior Vice President and Chief Financial Officer. After the market closed, we issued our earnings release, which can be accessed on the Investor Relations section of our website at ir.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 from the projections described in such statements. Factors that might cause such differences include, but are not limited to, those discussed in our forms 10Q and 10K, as well as other subsequent filings with the FCC. Information provided on today's call reflects our perspective only as of today, February 18th, and should not be considered representative of our views as of any other subsequent date. We explicitly disclaim any obligation to update any forward-looking statements or 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 Jamie to begin our prepared remarks. Jamie.
spk06: Thanks, Joshua, and thanks to all of you for joining us today. I'll keep my comments brief because I know that David and Patrick have a lot of highlights to share regarding a record year with numerous customer wins and accomplishments. But before I begin, I feel compelled to acknowledge the freezing temperatures and widespread power outages facing Texas and other states across the country. Our CEM platform is purpose-built for these crises, and our teams are actively supporting our clients across this region, assisting with hospital evacuations, supporting state and local governments with their communication of critical information on shelters and providing wellness checks for residents, Those helping businesses and their IT teams conduct proactive and preventative measures in advance of power shutdowns. We have hundreds of public and private customers across this region and are reaching out with our continued support. Now, looking at our results, our fourth quarter was a solid finish to what was an exceptional year for Everbridge. Our execution was excellent during a time that was turbulent and unpredictable. During the year, we were able to exceed our outlook and increase our guidance every single quarter. I'm particularly proud of the agility of our team demonstrated in quickly developing innovative new solutions on our CEM platform to help customers, such as contact tracing, return to work, and vaccine distribution. These solutions are extensions of our CEM platform and help customers to identify, manage, and respond to new threats against their people, assets, and processes. David will speak more about these solutions later in the call. We ended the year with a record revenue beat, reporting revenue of $271.1 million, up 35% from a year ago, and adjusted EBITDA for the year, growing at 56%. Our scale and robustness is also reflected in the number of interactions we delivered in 2020, 5 billion, up more than 40% from last year. More importantly, we achieved these results while continuing to invest in the long-term growth of our business and making key investments in our people, processes, and products. And just as important, through David and Patrick's leadership, the team delivered very strong adjusted EBITDA and cash flow. We have continued to expand our sales reach, not just with a growing sales organization, but also by engaging key partners that extend the Everbridge value proposition to a far greater audience than we can accomplish on our own. We are meaningfully investing in our solutions, expanding what is already the most comprehensive offering for critical event management with new applications, new created data sources, and new use cases. As a result, we're better positioned than ever before to lead the critical event management market and deliver attractive growth in the multi-billion dollar opportunity that lies ahead of us. 2020 has demonstrated how the Everbridge team can adapt CEM to solve any critical event, even a black swan event like COVID that literally affects every organization and person on the planet. And our ability to successfully address these enormous challenges begins with our management team led by David and Patrick. As I transitioned from executive chairman to non-employee chairman of the board, which was completed in January of this year, I'm confident in David's leadership and and I'm excited for our team on what the future holds ahead. Even though I'm no longer in an operating role, I remain committed to Everbridge, our employees, customers, and shareholders. Now I'll pass the call over to David to provide the details of our fourth quarter and full year. David?
spk07: Thank you, Jamie, for your continued commitment to our mission of keeping people safe and organizations running faster. We posted another strong quarter in Q4 with record-setting ASPs and the largest revenue beat versus guidance in our history. Revenue in the quarter was $75.6 million, up 32%, despite a strong comp in the previous year. Our adjusted EBITDA was $4.1 million, also exceeding our guidance, as we continue to effectively balance growth investments with prudent expense management. Throughout 2020, we delivered strong operational execution in what was a demanding and turbulent year. The agility of our organization enabled us to not only transcend numerous challenges, but to better serve our customers with innovative new use cases, such as contact tracing, return to work, and vaccine distribution, all of which leverage the power of our CEM platform. In fact, These newly introduced CEM applications and use cases helped us to set numerous records in the fourth quarter and 2020. In Q4 specifically, we achieved several new high watermarks, some of which had just been established in the previous quarter, including setting records for the number of CEM wins, the number of six-figure deals, quarterly average selling price, international revenue, and sales mix of new products. In addition to record revenue and our highest ever revenue beat, we also delivered our best ever quarterly free cash flow. And allow me to remind you that we routinely break our own records, but what we look to deliver is solid growth across all metrics and not just one-time highs. Turning to our full year 2020 results, where we also set new high watermarks. In 2020, our applications that identify risk and automate the response required to keep people safe through hurricanes, major cyber attacks, fires, and the pandemic reached a record 5 billion critical interactions, demonstrating our scale, resiliency, and market leadership. We closed the highest ever number of multi-product deals, delivered record revenue, and we reported our highest adjusted EBITDA. Finally, I want to point out that as a leadership team, we work hard to meet or exceed our stated commitments to our stakeholders. One target that we talked about coming into 2020, before we even began thinking about the pandemic, was a goal of generating positive free cash flow for the full year. I'm pleased to report that we delivered this commitment by finishing the year with free cash flow of $2.9 million. Before getting into the details of what drove this record performance, I want to take a moment to recognize the continued heroic efforts of our first responder medical and public safety professionals. These individuals continue to put themselves at risk in order to protect the broader population from this pandemic, as well as events such as the recent earthquakes in Japan, the terrible forest fires in Australia and California, the deep freeze in parts of the United States, and even major cyber attacks like the recent SolarWinds breach. And in every case, Everbridge was present to help keep people safe. More recently, people are asking how we successfully navigate the road to recovery from COVID-19, which currently involves solving challenging logistical issues related to vaccine information, access, distribution, and administration to the public. Many of you have heard or read about the hundreds of cities, states, educational institutions, and major corporations that are using our CEM solutions such as contact tracing or return to work to help people stay informed about the pandemic and to reduce risk upon identification of COVID-19 within their organizations or communities. Like other critical events, the majority of the actual effort goes into not just the upfront warning or provision of how to stay safe, but actually into the resolution phase, determining when and how to safely go back into communities. This dynamic impacts millions of people from communities to entire countries, each with their own unique set of variables to determine how to keep people safe and get organizations running. For the pandemic, vaccine distribution represents a key to resolving the challenges presented by COVID-19. which ultimately means saving lives and reopening our economies faster. And to properly manage the sheer scale, breadth, and resiliency required to address this challenge, from small rural counties to major population centers, people depend on proven and trusted solutions, like Everbridge, that can operate quickly and efficiently to save the most lives. This important recovery phase of combating COVID-19, the mass distribution of vaccines, It's just beginning, and it could last for an extended period as distribution of vaccines reaches higher levels and potential boosters are needed to counter new variants that are already appearing around the globe. The distribution challenges include monitoring vaccine availability, tracking vaccine shipments, and scheduling vaccinations, as well as scheduling follow-on appointments. All of these will require critical event management solutions that are already integrated with various public safety systems. Our CEM solution automates much of the standard protocols and processes to successfully manage millions of critical interactions a day, which are tested and proven to scale and deliver reliable performance, a set of requirements that we believe only Everbridge meets. In Q4, we rolled out vaccine distribution solutions to organizations from West Virginia to Ohio to Florida. In West Virginia, we rapidly rolled out a statewide solution, achieving nearly 100% of first-round doses being successfully administered. This implementation of our CEM solution with our partners in West Virginia has been widely recognized as a poster child for successful vaccine distribution. Our work with West Virginia has received positive recognition on major primetime news shows, such as CNN Tonight, ABC News, and NBC News, as well as other major media outlets. And the response to our early success in vaccine distribution has driven interest in our unique and differentiated solution, which we expect will continue to grow as the vaccine gets administered to more and more of the population. Solving this public health crisis faster will unlock the ability for governments to fully reopen economies for the betterment of all states, people, and businesses. We believe this success is emblematic of how we help organizations recover from large-scale critical events, now and into the future. Our critical event management technology forms the basis for these new applications, which helps to drive broad interest in our CEM and population warning applications. resulting in a record number of six-figure deals. In the fourth quarter, we also saw a record number of new and growth customers adopt CEM for a diverse range of use cases, which helped drive all-time high ASPs in the quarter. As we look back on 2020, we continued to make significant progress, adding new logos to our thousands of enterprise customers. We extended our leadership in critical event management with accelerating customer adoption and new use cases for our CEM platform. We advanced our CEM rollout in key international markets to help drive long-term growth. We also continued to see success with our population warning solutions, capped off with major wins in Europe and Asia during Q4. We drove new partnerships that will significantly expand our sales reach and volume. And we continue to invest in our platform, sustaining a focus on innovation to drive our long-term success. In addition to solutions for new COVID-19 use cases, we recently announced a next generation front end for our public warning solution. This new front end enables customers to create and send a combination of cell broadcast and address group and location-based SMS alerts for countrywide warning through a single console. I'm proud to announce that we received important patent protection for this innovation. Our comprehensive population warning platform is unique in its ability to provide reliability, scale, and coverage for entire populations, all in a single platform. Speaking of patents, we were also recently awarded a patent for making these alerts multimedia capable by leveraging the power of 5G networks. And now we have 15 public warning patents out of more than 160 total. This evidence of our CEM leadership expanding our global reach and enhancing our technology platform will continue to power our success in 2021, setting us up for another strong year. Looking deeper into our strong fourth quarter metrics, we added 146 net new enterprise customers in the fourth quarter, increasing our total enterprise customer count to 5,613. We had a record quarter for CEM, with 18 customers selecting or upgrading to CEM in the quarter, bringing the total number of CEM customers to 128, up 68% from the end of 2019. Despite our impressive gains in 2020, the number of our customers who have adopted CEM still represents a low single-digit percentage of our more than 5,600 customers, providing us with a substantial growth opportunity. With a growing number of larger deals, our average selling price in the quarter increased substantially to well over $100,000, breaking the record we set just last quarter. This resulted in a trailing 12-month ASP of more than $77,000 in the fourth quarter, the second highest trailing 12-month figure in our history. When combined with net ads that were above our target range, this resulted in meaningful sales activity for the quarter. In the fourth quarter, we also closed 66 deals of more than $100,000, a new record, including several that were valued at more than $500,000 per year. We closed 188 six-figure transactions in 2020, up 35% from 2019, with both new and existing customers among these, illustrating continued success of our land and expand strategy. In the fourth quarter, we completed 121 multi-product deals with new and existing customers. And with our customer base subscribing to an average of only two of our applications, we believe that we still have significant room to grow. From a product mix perspective, a record 66% of new and gross sales over the last four quarters came from new products, reflecting high demand for our newer applications. Our international business continues its strong growth, In the fourth quarter, we saw 28% of revenue from outside the US compared to 20% a year ago. Combined with our high overall growth, this means international revenue increased by 88% from a year ago in the quarter, driven by public warning and other transactions that I'll review in a moment. For the year, international revenue also grew more than 50%. The international opportunity will continue to be a meaningful growth driver for us in 2021 as we increasingly focus on further penetrating additional geographic markets. Finally, our revenue mix by vertical was consistent with recent history, coming in at 63% from corporate, 26% from local, state, and countrywide government, and 11% from healthcare, reflecting consistent growth across our target markets. As always, we remind you that quarterly metrics can fluctuate, but the longer-term trends continue to reflect our overall business momentum. Now allow me to pass along a few of the customer stories that drove our strong fourth quarter metrics. Our flagship CEM suite is the broadest, most advanced technology solution for keeping people safe and organizations running. Customers increasingly realize that CEM is not a nice to have, it's a must have for protecting an increasingly remote workforce. CEM wins in the fourth quarter include new customers such as Salesforce.com, a leading cloud company. We're also excited that new customers adopting CEM include a biopharma company who has developed one of the two early COVID-19 vaccines, as well as one of the leading U.S. cosmetic retailers, to name but a few. Examples of other CEM wins include government wins like the Virginia Department of Emergency Management and in Ohio, the Adjutant General's Department. After launching CEM internationally less than a year ago, with Siemens as a leading early adopter in the region, we continue to add highly respected brands with new CEM wins in Europe, including Roeschling Group, a leading plastics manufacturer in Germany. Roeschling chose Everbridge to digitally transform their corporate health, risk, and security programs, providing one proactive, unified platform to manage all potential risks. Our European wins also included market leaders, like one of the biggest broadcast and media companies in the United Kingdom. In addition to new customers, a number of existing customers upgraded to CEM, illustrating the success of our land and expand strategy. These included Chicos, a leading women's clothing retailer, as well as a leading multinational supermarket chain, who upgraded from mass notification to the broader CEM suite. In addition to these new CEM stories, in Q4, we saw numerous other major organizations select CEM as their platform of choice to not just provide assistance to their teams during the resolution phase of the pandemic, but to power the safety and resiliency of their organizations for years to come. These included organizations involved in the resolution of the pandemic, like Garnett Transport Medicine, who operates COVID-19 testing and vaccination administration in the Northeast, to pharma leader Exact Sciences, as well as other leading brands across all industries. Additionally, GoDaddy chose to replace many of their manual processes with risk intelligence and automation of response interactions from our CEM platform. KeyBank National in the financial space chose CEM to help them keep their thousands of customers and associates safe during the pandemic recovery. We expanded our relationship with the Los Angeles International Airport, the second busiest airport in the United States. This represents a great example of a current core mass notification customer that moved up to our CEM platform to manage all critical incidents or events at their state-of-the-art airport resource control center, including promoting a safe return to travel. Overall, a remarkable quarter for new CEM implementations. that will create momentum for 2021. In addition to direct sales, we are focusing on our partner ecosystem to extend our CEM sales reach through indirect channels. During the fourth quarter, several leading names became CEM distribution partners, including Northland Controls, a global physical security integrator and consulting firm. In addition to being a partner who has already demonstrated past success with our previously announced Cisco CEM deal, Northland Controls also became a customer in their own right in the fourth quarter. We also announced an expansion of our relationship with Atos. You'll remember Atos as the partner that led our state of California win. Through this extended partnership, Atos will create new routes to market for Everbridge by leveraging their global network of relationships across both public and private verticals. Everbridge will help Atos clients globally enhance their preparedness, for manmade, natural, and digital crises worldwide. These are substantive distribution relationships defined by significant seven-figure annual revenue commitments, making them an important part of our overall indirect strategy, which I first discussed as a goal upon joining the company as CEO. Additionally, we're working to further extend our partner ecosystem with leading brands that we expect to announce later this year. In addition to growing demand for CEM, our Q4 results represent strong adoption across all of our public warning solutions. One example would be another seven-figure win for our mass notification solution with the state of Oregon, further extending our statewide wins, which now total seven. As we've seen in Florida, New York, and California, in addition to representing a new statewide deal, our win in Oregon should lead to our network effect success at other institutions like higher education, hospitals, local public safety, as well as major corporations to drive our long-term success. We also saw a substantive number of new and growth mass notification, safety connection, and IT alerting winds across all markets globally, beginning with leading brands like NuStar in North America, Alta Gas in Canada, and one of France's leading home healthcare providers, all of whom chose our safety connection application to keep their employees safe from critical events and assist with their organization's broader return-to-work programs. Our mass notification, incident communications, and risk center applications registered new wins at one of the world's largest copier and printing companies, Muskegee Creek Nation, and Architect of the Capital, to name just a few. And our IT alerting product was selected by leading organizations globally, such as Phoenix Pharmaceutical GmbH in Germany, Rite Aid, and Epic Systems in North America, as well as one of the largest global pharmaceutical manufacturers based in the United Kingdom, all to help their teams manage critical IT events that threatens their organization's ability to keep running. It's important to note that all of these customers sign six-figure-plus contracts, and for many, it's just the beginning of their journey to the full CEM suite. Finally, in addition to our strong statewide Oregon win, we saw continued success in the federal market with wins like defense finance and accounting services, another new agency win, and major expansion projects at one of the four major branches of the US military, as well as one of the largest military locations in North America. Our international momentum also grew in the quarter with numerous notable public warning transactions around the world. Demonstrating our network effects in the fourth quarter, we expanded our countrywide wins in Europe by signing three of the United Kingdom's four largest network providers for our cell broadcast public warning solutions. While we believe that most of the activity related to the EU mandate requiring countrywide public warning systems will come later this year and into early 2022, we are excited by these early wins in Europe. reinforcing our position as the leader with the most countrywide deployments with customers in each region of the world. In Sweden, we signed a significant five-year expansion of our population warning contract, which now includes all the mobile operators, enabling Sweden to send location-based SMS alerts to virtually every resident and visitor, powered by EverBridge through SOS Alarm, the national system operator. In addition to our success in Europe, we added the Indian state of Kerala in the fourth quarter, home to over 50 million residents and annual visitors, representing a major new public warning customer for us. It's truly exciting to see these public warning winds across multiple continents. In summary, our excellent fourth quarter capped off a strong year for Everbridge. We're proud of the role we continue to play in keeping people safe and organizations running. During 2020, we focused on expanding our leadership in CEM, expanding our sales reach with more indirect channels, growing our international footprint, and extending our technology. Our success in these areas sets us up for another strong year in 2021, as we continue to penetrate a multi-billion dollar market opportunity. Now, I'll turn the call over to Patrick for more details on our fourth quarter financial performance and our guidance for Q1 and full year 2021. Patrick?
spk11: Thanks, David.
spk10: I will review our financial highlights from the fourth quarter and provide guidance for the first quarter and full year 2021. In addition to a number of record business metrics, as David mentioned, we also posted a number of new high watermarks for financial metrics in the fourth quarter, including free cash flow. Revenue in the fourth quarter was $75.6 million, an increase of 32% from a year ago. and the largest dollar beat versus guidance that we've reported in our history as a public company. Our net retention rate continues to track well above 110%, reflecting consistently strong customer satisfaction combined with demand for additional Everbridge technology at existing customers. Looking at the details of our P&L, unless otherwise indicated, I will be discussing income statement metrics on a non-GAAP basis. A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release we issued earlier today. Gross margin was 73.7%, an increase of 340 basis points from last year as we continue to benefit from greater scale. Total operating expenses in the quarter were $54.4 million, an increase of 45% from a year ago, reflecting continued investments in our platform and our go-to-market strategy. Adjusted EBITDA was $4.1 million, above the high end of our guidance range, and reflected the backend weighting of growth investments this year. Net income in the fourth quarter was $1 million, or 3 cents per diluted share, compared to $3.2 million, or 9 cents per share, a year ago. On a GAAP basis, our net loss was $24.6 million. For the full year 2020, Revenue was $271.1 million, an increase of 35% from 2019. Gross margin improved 160 basis points to 72% in 2020. And adjusted EBITDA also increased at $8 million for the year, an increase of 56% from 2019, and a record for the company. Looking at our balance sheet, we continue to be well-capitalized. ending the year with $475.6 million in cash, cash equivalents, restricted cash, and short-term investments, compared to $477.2 million at the end of the third quarter. Free cash flow was a record $15.9 million for the fourth quarter, compared to an outflow of $1.3 million a year ago. For the year, free cash flow was $2.9 million. Total deferred revenue was $170.1 million at the end of the quarter, an increase of 27% from a year ago, and a sequential increase of more than $20 million. As we note every quarter, our deferred revenue balance at the end of any given quarter can vary due to a number of factors, including the timing of significant new contracts and the timing of annual billings for new and existing customers. For example, we saw an increase in the eight-figure backlog of completed transactions that are not yet reflected in our deferred revenue, but will have revenue recognized in future periods. 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. and that our longer-term performance continues to support our growth objectives. Now, I'll turn to our guidance for the first quarter and full year. We believe our growing market momentum, increasing market awareness, and robust demand for our technology support our expectations for continued rapid growth in 2021. Our guidance for 2021 also includes the impact of continued technology and operating investments to support building greater scale in our organization. Throughout 2020, the overarching focus on the pandemic and recovery accelerated demand for certain parts of our business and likely delayed customer decisions on other initiatives. We believe that this has created certain levels of pent-up demand as well as new expansion opportunities. that it will be difficult to predict with certainty when customers will begin to pay more attention to their important broader term initiatives. Further, while we benefited from a significant decrease in travel-related expenses in 2020, our guidance for 2021 contemplates that we will see an increase in travel-related costs later in the year. As a result of these factors, we continue to be very enthusiastic about our prospects. but we'll continue to take a sensible, mature approach to our guidance. With that backdrop for 2021, we expect revenue to be in the range of $342.1 to $344.1 million, representing growth of 26 to 27%. We anticipate adjusted EBITDA to be in the range of $7.5 to $8.5 million. We expect a non-GAAP net loss of between 8.8 and 6.8 million dollars or a loss of between 25 and 19 cents per share based on 35.6 million basic and diluted weighted average shares outstanding. This guidance assumes estimated stock-based compensation expenses of approximately 56.9 million dollars for the year. For the first quarter, we anticipate revenue of between 75.3 and 75.7 million dollars representing year-over-year growth of 28% to 29% for the quarter. We anticipate an adjusted EBITDA loss of between $600,000 and $200,000. We anticipate a non-GAAP net loss of between $4.1 and $3.7 million, or $0.12 to $0.10 per share, based on 35.5 million basic and diluted weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $13.7 million for the quarter. In summary, we delivered a strong fourth quarter and year and are well-positioned to continue our track record of rapid growth as we further penetrate the multibillion-dollar opportunity ahead of us. We believe we are better positioned than ever to deliver on our mission, benefiting customers, employees, and our shareholders as we continue to penetrate this opportunity. Now, operator, we'd like to open the call for questions.
spk03: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. Our first question is from Scott Berg with Needham. Please go ahead.
spk16: Hi, Jamie, David, and Patrick. Congrats on what looks to be a great quarter, and thanks for taking your questions. I guess first question, David, I know we've had a couple conversations about this last six months, and Patrick just talked about some pent-up demand there. I know it's early, and you don't know what the timing of this potential pent-up demand looks like, but what are you seeing in terms of budget scenarios that a year ago were probably ready to be spent but recently have been put to the sidelines?
spk07: Hey, Scott. Good to hear from you. Thank you. Yeah, I think it's a great question. And you see, you know, as we came into this Q4, we looked at last Q4, which was an all-time record blowout quarter for us. And you say, wow, that's going to be a tough comp. And then this Q4, we set a new record for the most number of six-figure deals we've ever had in a quarter and the most number of CEM deals we've ever had in a quarter. that does feel to us like things may be starting to thaw. And as we exited Q4 and looked at the sales funnel, definitely saw more seven-figure deals in the funnel than I'm used to seeing since I joined the company. So it does feel like things are starting to thaw. But with that said, we do want to be prudent in terms of, you know, we're still in a dynamic situation with variants of the vaccine and the economy and a lot of different things going on as we look forward. But we do like some of the the signs we saw as we came out of the quarter.
spk16: Excellent. Helpful. And then from a follow-up question, Patrick, biggest revenue beat ever in the quarter. We know that you've had the opportunity to sign a couple of perpetual license-type deals. You know, trying to understand what drove the large revenue beat in the quarter. Was it maybe some linearity in the quarter that happened earlier than expected or maybe some of this perpetual revenue that came in? Any color there would be helpful.
spk11: Thank you.
spk10: Yeah, thanks, Scott. No, just continued strong performance. I mean, the one-time revenue that we have been recognizing, it's only about 3% for the full year. You'll see that when we file our 10-K. So just strong performance in the quarter.
spk11: The next question is from Ryan McWilliams with Stevens.
spk03: Please go ahead.
spk08: Thanks for taking the question. Nice to hear about the Salesforce win. And interesting, this came after Salesforce recently noted in a blog post that they plan to have more remote employees going forward. As enterprises move more remote and more distributed due to COVID, is this a tailwind for your 2021 CEM pipeline? And is there any new products that existing Everbridge clients could adopt to protect the remote workforce, maybe things like safety connection or enhanced risk data?
spk07: Ryan. Yeah. Thanks for the question. It's very insightful because when some of the industry tailwinds to what we do, we've always talked about remote workers. In fact, you know, my standard investor deck, I was a little naive. I think I had a stat in there that said by 2025, we'd have more than 70% of workers will be remote. And I think none of us realized that by 2020, it would be like 99% because of COVID. So we've always built and architected our system around the fact that we protect everything you care about, including all your people, even when they're not at headquarters. So Safety Connection was a product that was specifically built around supporting remote workers and workers that are traveling, workers wherever they are. So we've really built towards this since the launch of CEM four or five years ago, and we think we're very well positioned to capitalize on the new normal of a much more geographically dispersed workforce. You have specific solutions, safety connection being a big part of that. We've continued to enhance our risk data now with over 22,000 data feeds, including lots of hyperlocal data. You're really able to have good situational awareness, keep track of anything you care about, including remote workers and anything that's a possible threat, and be able to have automated workflows and essentially digitally transform the process to keep track of everybody. It is a very important trend for us. The market's kind of come to where we've been all along, and we're getting a lot of customers that are looking forward to using our system as they evolve their kind of workforce in the future policies.
spk08: Great. And then pleased to see ASP step up again in the fourth quarter. You know, anything to call out here, maybe more influenced by public warning or due to new versus existing customers? And how should we think about this trending into the next fiscal year?
spk07: Yeah, thank you for that. I think we talk about the basic formula that our CEM wins are much bigger than our average wins, and so this quarter we had an all-time record in the most CEM wins we've ever had, and we think that's an important driver of getting customers to do larger deal sizes with us. So we continue to see the land and expand strategy that we talked about earlier this year is working. where we're getting customers in the door quickly and then very rapidly cross-selling and up-selling them. So I think every quarter this year we had really strong sales performance as it relates to what we call growth bookings, which is essentially cross-sell, up-sell. So that's pretty exciting. And then our new logos this quarter came in above the range that we say we usually target. So we're happy about that as well. Thank you.
spk03: The next question is from Will Power with Baird. Please go ahead.
spk09: Okay, great. Yes, I guess a couple of questions. You know, David, you know, clear community benefits from the vaccine registration capabilities, contact tracing, you know, et cetera. I know some new wins announced. I wonder if you could just talk, you know, about, you know, the revenue benefits, you know, from some of those initiatives versus, you know, perhaps just the broader exposure of the Everbridge, you know, suite of products.
spk07: Yeah, so the vaccine, I will talk about that because I think what we've seen is sort of the power and the dynamic capability of our CEM platform where, you know, coming into the year, we weren't planning specifically for a global pandemic, but we're able to leverage the platform with very powerful, I think, best-in-class use cases, technology around contact tracing, return to the office, and now... Vaccine vaccine distribution. So the state of West Virginia, I think, is the best example. They called us and the total sales cycle for that deal was 21 days. They needed help. And by the way, the state of West Virginia, the leadership there has done amazing across the board with this vaccine distribution. And we really respect the state leadership in West Virginia. But they wanted additional help. And so once they said go, I think within a week or two weeks at the most, we had the system up and running for the entire state of West Virginia. And we had to be able to scale it to handle big performance because, you know, in those first couple days, I think we had something like 150,000 registrations hitting the system. So they were coming in pretty fast. So basically the system up 100% turned up very quickly because that's what we need right now. This is a tight window to hit. And then the state of West Virginia, on average, across the United States, states have been getting about 53% of the doses into arms, and West Virginia has been almost at 100%. So they are the number one state in terms of their efficiency and effectiveness in getting vaccines in, and we've been really honored to be able to support them in that. And they're getting a lot of media coverage as well. So, you know, they've been on national cable news, Sunday shows. And we appreciate them and very vocal on mentioning us by name as part of their success. So in terms of the deal sizes, you know, we're doing all different level size deals there, you know, from Sarasota County in Florida, where I think we had 50,000 registrations in the first hour, to the entire state of West Virginia, to other campuses and other types of customers. But West Virginia, I think it's been publicly stated that contract was, you know, it's a not, you know, between $500,000 and $1 million. So that's a, you know, that's a good contract compared to our normal ASP.
spk09: Yeah, that's great. Well, that's a great use case. And, I mean, good luck for everybody, I guess, for maybe trying to expand that to other states. I guess the second question, look, great to see the record number of CEM wins. Anything you'd call out with respect to key drivers around that, were there particular verticals, you know, geographies, anything else you'd point to as really helping drive that record number?
spk07: Well, we had strength across all verticals and geographies. In terms of geos, it's worth mentioning that we did just launch CEM in the second half of the year into Europe. So we do have new geographies that are contributing that weren't there before. So we're excited to see the progress there, including some really amazing logos that we have. Siemens being the first big name that signed up with us as kind of our temple CEM customer for Europe and And Siemens, very respected. They've got a great leader as their chief security. So broad strength across the board on CEM. And I think just stepping back, the bigger picture is in the middle of a global pandemic, and as people start to think going forward, there's a recognition that many organizations were not as prepared as they should have been for an event like this. And they know that they've got to be better prepared going forward So we just are a very quick, easy way. You know, we're cloud-based. We can get up and running quickly relative to other software investments. You know, we're not that expensive, and we represent best practices. So I think there's a growing recognition of that and just awareness that CEM is more of a must-have than a nice-to-have.
spk03: The next question is from Tom Roderick with Stiefel. Please go ahead.
spk05: Hi, everybody. Happy New Year. Thanks for taking my questions. I wanted to kind of dig into that CEM question just a little bit more. I'd appreciate some of the commentary regarding go-to-market, particularly rounding out Europe in the second half of the year. I guess my question would be as you sort of look at the penetration rate, you're adding customers at a very nice clip, yet to your point, the penetration rate is still really quite low. When you mobilize CEM with the sales force, What's the strategy with hitting that installed base and driving that penetration rate higher? Where do you think you can kind of take that number to as you look at it over the next year? Maybe a better way to think about it is longer term. What percentage of the installed base do you think you could move into CEM?
spk07: Yeah, Tom, thanks. Good to hear your voice again. So, look, we serve all verticals, and I think all geographies need CEMs. So we believe ultimately we should be at 90% of the Fortune 1000 and the Global 2000. We're only at about a third right now, so we see a lot of opportunity there. On the cross-sell, up-sell side, on average of our 10 software applications, our customers only have about two right now. So we've got over 5,600 customers. There's a lot of opportunity to up-sell, cross-sell, and we're seeing record high numbers of our newer strategic products as a percentage of our total bookings We're seeing the right trend there. What's happened in the pandemic is customers have very specific pain points and needs. We're just building them, continuing to add more software modules, more use cases. Once we get their data in the system, it's just very easy for them to turn on these use cases quickly. And so we're just building them towards CEM. And, you know, I gave some specific examples where we're giving MN customers and then they go to the whole CEM suite. In some cases, go out a couple pieces and build towards it gradually. So I don't know that we're forecasting a specific number for CEM next year, but I think to your point, the longer trend line is, you know, we just think we're in like the second inning of this nine-inning game. And, you know, we're seeing more and more people using our language talking about critical event management, both customers and competitors. And we just think that this is the maturation of this category, which, you know, Jamie pioneered four or five years ago. And I think, you know, the rest of the industry is starting to catch up to what we're doing.
spk05: Yeah, that's great. And then just to follow up in terms of the, you know, the public warning wins and the international opportunity, it seems like that's been a little bit of sort of a two-prong approach with with A, showing them the value of the platform and the software, and B, there seems to be a little bit of an installed hardware component that takes some time to displace. You've talked a little bit about that with Australia. Maybe you could kind of give us some insights into how those two prongs are working as you look at other opportunities and places, but particularly Europe and the countrywide opportunity there. How is that progressing? How is the pipeline looking? And how do you kind of tackle part one versus part two, which is the hardware displacements?
spk07: Yeah, Tom, that's a great point. So just taking a step back, public warning solution has really two parts to it. One is the front end that we sell to the government that allows them to control all the public warning across their population, all their visitors, everyone in the country. And the second piece of it is on the back end, we have solutions that we sell into all the wireless carriers in the country. And those deals can be two to three times, sometimes even more than what the government pays on the front end. So they're all interconnected, and it's a little bit of that network effect we talk about because if you get all the carriers, you have a lot of leverage to ultimately do more with the government, and if you get the government, it creates leverage with the carriers. So one of the big things now I think coming out of our acquisition of One to Many is we are in a much better position to sell the carriers first and then sell into the government, where I think historically we were doing government first and then selling out to the carriers. Now we really can go bidirectionally. And I think that puts us in a very powerful position. And we're starting to see that with some of the wins we had in the fourth quarter, which frankly came earlier than we expected, because we're really thinking most of these deals in Europe are going to come at the end of this year or the first half of 2022. So we're very happy about that. And by the way, for Q4, we had a record number of public warning contract wins in addition to record CEM, so that was a good result.
spk03: Again, if you have a question, please press star, then one. The next question is from Matt Stotler with William Blair. Please go ahead.
spk12: Hey, guys. Thank you for taking my questions. I guess just one to start off on the kind of the land and expand motion you talked about, obviously kind of a shift in adapting to the COVID situation. But, you know, obviously it sounds like there continues to be a lot of demand for your, you know, especially your COVID-specific use cases. So we'd love to get any sort of, you know, metrics of color around contribution you're seeing, whether revenue billings, et cetera, related to the COVID-specific use cases. But more importantly, what portion of those customers are you seeing adopt, rapidly adopt additional solutions? Any additional color there would be helpful.
spk11: Thank you, Matt. Patrick, do you want to take that one?
spk10: Yeah, well, to date, we've seen great adoption by a lot of customers who came to us for the COVID specific use cases by applying the software to other use cases. And then as a result, as they do that, they come back and they buy more products, more contacts, more usage products. And when we created the COVID Shield products, anything related to the pandemic, what we did is we pivoted quickly to sort of repackage what was already on the truck, and we're just selling the platform. And so when customers turn on the, depending on what they purchased, if they've got risk-related information and they see the depth and the breadth and the accuracy of that and how actionable it can be when we correlate that with the things that they care about, they realize that they can use it for multiple use cases. And they start to do that because we help them do it very efficiently and effectively. So we've had contact tracing customers that turn it into campus safety and security pretty quickly. We've had COVID Shield customers who start watching physical goods as they move around rather than just folks who are traveling into sort of dangerous regions. So we're excited. that those are relatively hot leads for continued expansion. Thanks, Patrick. That's helpful.
spk12: And then just a quick follow-up on the partner relationships that you're building. Obviously, a really interesting area of investment for you guys. Still relatively early in terms of building that out. Obviously, Tolaris was a big one last year. Atos, you mentioned, obviously, the early one there with California and continue to expand that. So, we'd love to, I guess, just get a little more color around how you're thinking about the timeline for how these partnerships ramp and what kind of investments or enablement remains to really drive success here. Thank you.
spk07: Yeah, thanks, Matt. As you may remember, I talked about increasing our routes to market through indirect channels and partnerships as a priority when I first joined. And as we talked about with free cash flow, when we say we're going to do something, we do try to follow up and fulfill our commitment. So, Last year was really, I think, a foundational year. We signed some really good partnerships. And it's just like anything else, you know, when you get success, when you win a deal like State of California, which was a very large contract both for Atos and for Everbridge, both parties get excited and feel like, let's go do more of that. And so now we've structured a much more strategic relationship, which is global in nature, which includes a fairly significant seven-figure contract revenue commitment per year. And so now, you know, we're building out the scaffolding in both organizations to where we can get their sales force more fully trained and look at different integration points and ways that, you know, one plus one can equal three. So we're having, you know, very, very top level, regular sort of strategic steering committee meetings that I'm personally involved in, and Jamie has been very helpful in getting this partnership to a new level with his relationships at Atos. So we think that's a great model, and we expect to see good success from that. Similarly, Northland Controls is one where we had more of an opportunistic partnership with them, and together landed a very significant CEM win at Cisco, which we've talked about in a previous Marines call. And I think both parties saw the potential to do more, and now we've got a more intentional strategic and proactive structure to how we're going to go out and try to win more deals. And Northland Controls also this quarter signed up to be a bigger customer of ours as well in their own right, which we thought is a great demonstration of their commitment. So we're excited. We've got some other ones that we're working on that we'll probably be talking about later this year as well.
spk03: The next question is from Sterling Audie with JP Morgan. Please go ahead.
spk15: Yeah, thanks. Hi, guys. I wonder if you could give us maybe a little bit of an update of what you're seeing in terms of use cases within more of the IT framework as opposed to some of the employee notification in both new purchases and maybe some expansion within existing customers.
spk07: Hi, Sterling. Great to hear from you. Thank you for the question. Yeah, so... You know, we're really an enterprise-wide operating system for the company. And to that end, our relationship with the CIO organization is very important. And we actually have seen, we saw very rapid growth in both our bookings and revenues for our ITA solution last year. And we had a good Q4 as well. So that's been a real winner for us. in terms of one of our solutions and an area that is very core in terms of our ability to really support the entire enterprise. And in many cases, allow the customer to, you know, standardize on us and consolidate away from multiple other vendors or internal processes, more manual processes. So we think that's going very well. And the use cases, you know, the cyber attacks are way up with the pandemic. and the solar winds, and so when a cyber attack brings you down, that's a critical event. IT outages are very expensive. We've got some great referenceable customers and use cases, for example, Lowe's and others, where they've made great use of our ITA solution help there as well. So multiple different use cases, really good positive ROI-based use cases with good return on investment in an area of rapid growth for us and where we expect to see continued success.
spk03: Great, thank you.
spk07: Thanks.
spk03: The next question is from Brian Peterson with Raymond James. Please go ahead.
spk04: Congrats, gentlemen. Thank you for taking the question. So I wanted to follow up on Matt's earlier question on the Parker Channel. David, how would you define success from the Parker Channel? Is there a longer-term goal in terms of pipeline or bookings contribution? And I realize you're going to get there this year, but maybe longer term. How should we think about the evolution and how you would define success there?
spk07: Well, Brian, thank you. As we've said, it's an area of focus for us. We're trying to become the standard. I mean, we want the audit committee of the board to say, you know, are we PCI compliant? Are we SOX compliant? Are we CEM compliant? And the more high-reputation partners that we can get that are in the C-suite, having those conversations, already doing a lot of work for these customers – It just helps us extend our reach, particularly as we look at the international opportunity, which we see as being very significant for us. Strategically, it's just beneficial for us to raise awareness, get more at-bats, more opportunities into the funnel. We also find some of our largest deals come from these partner relationships. Our average deal size on these are very good as well. We mentioned the biggest contract we ever won came through a partner relationship with Atos. Defining success, I mean, in past jobs, I've come in where we had less than 5%, and over a period of multiple years, been able to get that to 25% to 30% of bookings coming from indirect channels and partners. I don't know if that will happen here. I think we're just getting the flywheel spinning faster and faster every quarter, and we're looking to grow the unique contribution in terms of direct partner deals as well as partner influence deals. And so just see that continue to grow every quarter. And then, you know, how high can we get it? As I said, I've seen in the past, 25, 30% is certainly possible, but we're not, I mean, it's not that we're not really banking on that. We're not modeling around that, you know, that would be upside.
spk04: Great. No, we look forward to following that. And Patrick, just maybe one for you. I can't avoid the billings questions, but I'm just curious, was there any impact on FX that you would call out on deferred revenue for the, for the fourth quarter?
spk11: Thanks guys. And nothing material.
spk10: Certainly, FX is part of the dynamic landscape as we look out into 2021. But to date, we haven't experienced anything that's notable enough to call out.
spk03: The next question is from Terry Tillman with Truist Securities. Please go ahead.
spk13: Hey, guys. This is Nick on for Terry. Thanks for taking our questions. So I just wanted to ask about the trajectory of customer ads going forward. You know, it seems like you guys have either been above or at the top of the range that you guys typically provide for a while now. I was just wondering if you'd expect that to continue going forward and then as a follow-up, you know, how the large deal pipeline looks as well. Thanks.
spk07: Nick, thanks for the question. Yeah, we don't expect to change the guidance on the new logo ads and we do feel confident that we'll be able to continue to perform as we have been or better. In terms of the funnel, as I think I mentioned earlier, just looking at the funnel as we exited Q4, I saw more seven-figure deals than I think I've seen at any point since I've been with the company. So we are seeing, and again, Q4, we had a record number of six-figure deals. So it does feel like the return of the large deal, which we'd like to see.
spk03: The next question is from Brad Sills with Bank of America. Please go ahead.
spk17: Oh, hey, guys. Thanks for taking my question. I wanted to ask about the comments made earlier, please, on pent-up demand. Obviously, you're seeing success with COVID Shield. So the pandemic has been a tailwind there. You've mentioned some large deal activity, which sounds very healthy. But I know you've seen some headwinds in other parts of the business, and you're saying that there's some pent-up demand here as you exit. Can you just help us understand what areas that might be that we might see accelerate as you exit the pandemic? Thank you so much.
spk07: Brad, thanks for the question. Yeah, there are definitely, well, there are some use cases that we've emphasized during the pandemic. There are significant use cases that we haven't been able to sell as much. So just one example, all of our salespeople love to sell executive travel, travel risk management products. And that's just, it's a very intuitive fit with a broader CEM when you've got executives and people traveling all over the world. And obviously that's been a use case that's been much harder to sell since the pandemic. And so, you know, we do expect as people start to travel more and that returns as a normal part of business, that that will be one that we go back to selling more frequently. So we definitely have a list of use cases that we're looking forward to getting back and selling more. more commonly as we were doing prior to the introduction of the pandemic.
spk03: The next question is from Babin Shah with Credit Suisse. Please go ahead.
spk01: Great. Thanks for taking my question and congrats on the strong end to the year. David, nice to see some early returns on your CEM investments internationally. Maybe can you elaborate on some areas of investments into 2021? Any specific geos you're focused on?
spk07: Thank you for the comments and the question. So we're going to continue to expand internationally and try to take advantage of the network effects that we've seen in some of the large states like New York and Florida and California where we win the statewide public warning and then we start to win all the entities in the state. So on the public warning side now, we actually have won customers in every major geography in the world. So we've got customers in Latin America, Africa, Middle East, Asia, Oceana, and we've got more European countrywide customers than any other provider. So we see opportunities wherever we win a public warning deal to then go in and in a very intentional way accelerate the network effect adoption to drive additional deals. And we're seeing it in places like Singapore right now. So in the last earnings call, we talked about the fact that we've seen nice deal flow in the Middle East where historically we haven't really done a lot of business and now I think we said we have over 60 customers in the Middle East. So we just think it's a global problem that needs a solution like what we're doing with CEM and it's just a matter of getting more distribution into these areas so we can take advantage of the opportunity.
spk03: The next question is from Mike Lattimore with Northland Capital Markets. Please go ahead.
spk14: Yeah, thanks very much. I guess in terms of the European Union opportunities for public warning systems, sounds like you're sticking with the same kind of timeframe in terms of RFPs and announcements and so forth. But I guess any sense of whether things are shifting a little bit? You know, you talked about UK here. I don't know. Is anything getting sort of pulled in, let's say, in the public warning arena for the EU?
spk07: Well, thanks, Mike, for the question. So yeah, we are seeing, uh, we're seeing some signs of RFPs coming and so we're starting to see some movement. Uh, we're not seeing things where we feel like we would change what we've been saying all along, which is in terms of actually like, you know, getting an RFI than an RFP, making a selection, implementing the solution. I mean, we still think from a revenue perspective, you're talking about first half of 2022, maybe the end of 2021. But are we seeing more signs of activity? Yes, we definitely are. And clearly, Q4, we had more wins, most wins we've ever had in a quarter for public warning. So I think we're seeing signs of life, but again, not so much that we would change what we've been sort of telling people about the timing of revenue.
spk14: Great. And then on the Kerala win, I think I'm pronouncing that correctly. Was that government and mobile network operators there? And then also... Did you benefit from some network effect having been in India already for that win?
spk07: Yeah, Patrick, do you want to talk about Kerala?
spk10: Yeah, it was both. We won the front end, and then given that we already have network connections in the country of India, we were able to leverage those to win back-end opportunities for that state as well. So, yes, we do see that sort of domino effect continuing to work for us.
spk03: Due to time constraints, this concludes our question and answer session. I would like to turn the conference back over to David Meredith for any closing remarks.
spk07: Well, thank you for joining our call today. We delivered a strong financial performance in 2020 in the midst of the COVID-19 pandemic, increasing our top line guidance every quarter and delivering 35% revenue growth for the year. We hope to see some of you at the upcoming Raymond James Institutional Growth Conference on March 2nd. In the meantime, Thank you for your interest and good night.
spk03: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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