Everbridge, Inc.

Good day and welcome to the Everbridge Incorporated first quarter 2021 earnings conference call. All participants will be in a 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. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Joshua Young, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon, and welcome to Everbridge's earnings conference call for the first quarter of 2021. My name is Joshua Young, Vice President of Investor Relations for Everbridge, and with me on today's call are David Meredith, CEO, and Patrick Brickley, Senior Vice President and Chief Financial Officer. After the market closed, we issued our earnings release, which can be accessed on the Investor Relations section of our website, at ir.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 for the financial performance of the company that involves 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 10Q and 10K, as well as other subsequent filings with the SEC. Information provided on today's call reflects our perspective only as of today, May 10th, 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 gap to non-gap financial measures is included in our press release. With that, let me turn the call over to David for his prepared remarks. David?

Thank you, Joshua, and thanks to all of you for joining us today. We feel very excited about our first quarter results, which not only exceeded our guidance, but demonstrate continued positive momentum for our key long-term growth strategies, CEM and public warnings. During the quarter, we benefited from the re-acceleration of non-COVID-related CEM and public warning use cases, while still expanding life-saving vaccine distribution and back-to-work solutions. Increased demand for both our CEM and public warning platforms drove continued ASP growth that delivered the largest quarterly revenue beat in our history. In fact, Q1 represented our fourth record quarterly beat in a row, and our 18th consecutive quarter of outperformance as a public company. Revenue in the quarter was $82.2 million, representing growth of 40% from the prior year. This despite the challenging comparison with last year's outstanding Q1 results. Our strong revenue, coupled with effective cost management, produced a new high watermark for profitability in a first quarter with adjusted EBITDA that landed above the high end of our guidance at $5.3 million. Last quarter, we discussed the return of larger CEM deals in the sales funnel as businesses transition from lockdown mode to reopening mode and make plans to support the future of work in a new normal post-vaccine distribution. Accordingly, our Q1 performance reflects strong pipeline conversion which included more than doubling the number of deals larger than a half million dollars and increasing the number of $200,000 plus deals by 60% from just one year ago. This helped fuel several new high-water marks for Everbridge, including all-time records for revenue, trailing 12-month average selling price, or ASP, international revenue mix, and operating cash flow, which was $19.8 million for the quarter. In addition to these records, we also posted our best-ever first quarter results for non-GAAP gross margin, free cash flow, and adjusted EBITDA. Our long-term growth strategy continues to drive our success through landing and then expanding deployments of our CEM platform at organizations, as well as winning public warning solutions for governments. Our CEM growth results both from landing new customers from global geographies and vertical markets, as well as selling additional solutions to existing customers. We continue to expand the penetration of CEM by increasing the number of use cases and extending our capabilities to additional departments within our customers' organizations. For example, in the first quarter, General Mills, a multinational marketer and manufacturer of branded foods, became a new Everbridge customer by adopting CEM to automate threat identification, organizational response, and visualize supply chain risk. One of the world's largest intergovernmental organizations became a new vaccine distribution customer in the quarter. This customer selected our vaccine distribution software platform to help them manage the scheduling, tracking, and communications of vaccine immunization and administration. for millions of doses across dozens of countries, highlighting the scalability of our platform. More and more frequently, our market reputation enables us to engage with more senior leadership at large organizations, resulting in bigger deal sizes and increased standardization on Everbridge as part of a vendor consolidation strategy. This strategy provides a single pane of glass across digital and physical threats. while also saving money for our customers. New CEM product features and capabilities announced in the first quarter, combined with our recently closed acquisition of X Matters, further support this approach. In our first quarter, this strategy continued to drive greater market acceptance of our CEM platform as illustrated by larger wins. Increasingly, these include seven-figure deals. On the public warning side of the business, In Q1, we further expanded our presence in key markets and we announced two new public warning patents, including our latest for technology that focuses on hybrid population alerting systems and intelligent sending of messages and public mobile networks. We have won customers in more countries than any of our competitors across every major region of the world. When governments and carriers look for global large-scale referenceable accounts, and public warning examples, they select Everbridge. During our most strategic, I'm sorry, driving our most strategic growth engine, we saw customers deploy numerous new critical event management use cases in all of our target markets and across the globe. And we continue to push the technology boundaries as an innovator and pioneer in the CEM space for new applications and use cases in a post-pandemic world. This past quarter, we also announced the expansion of our industry-leading critical event management platform to provide the most comprehensive integrated suite of digital and physical resiliency solutions for global organizations. Customers can rapidly deploy our CEM platform on a modular basis to support hundreds of positive ROI use cases across five major categories. The first category is CEM for People and Life Safety, which fulfills the duty of care that an organization has for its customers, remote and on-site employees, travelers, and field workers. Next is CEM for operations and business continuity, which helps ensure businesses can keep their operations running faster. Then CEM for supply chain risk, which manages and optimizes supply chains and supply routes, followed by CEM for smart enterprise, which accelerates digital transformation through smart automation, secure IoT management, big data, and advanced analytics. And finally, CEM for digital, where our solutions protect an organization's brand and reputation while providing resiliency for IT systems and cybersecurity in an increasingly virtual world. Demand for these CEM implementations, as well as our demonstrated domain expertise and leadership, drove numerous wins and expansions in the quarter, including Kimberly Clark, A leading manufacturer of paper-based consumer products became a new Everbridge customer as part of their effort to fulfill a duty of care to employees with initial emphasis on post-pandemic business travel. T-Mobile, one of the largest mobile carriers in North America, signed a significant expansion deal by adopting CEM to establish an enterprise-wide threat and incident dashboard. A few other examples from Q1 include Ricoh USA that followed the lead of their counterpart in the UK to become a new Everbridge customer. Ricoh will be leveraging our risk intelligence and mass notification capabilities to establish a robust threat assessment tool paired with a communication platform to accelerate their security strategy. Dentsu International, a global advertising and digital marketing company, also expanded their relationship with Everbridge CEM to protect their 46,000 employees from the impact of COVID-19 by leveraging risk intelligence and internal collaboration tools to automate and streamline incident response. Turning to examples of other meaningful wins, you may be aware that Everbridge serves dozens of Native American and First Nation tribes across North America. In Q1, our win with the Muscogee Creek Nation Health System of Oklahoma expanded their relationship with Everbridge by selecting our vaccine distribution solution to more efficiently coordinate and administer the COVID-19 vaccine to its tribal members. The Muscogee Creek Nation, which is the fourth largest Native American tribe in the country, chose Everbridge to automate the registration, scheduling, administration, tracking, and reporting of vaccinations among its more than 90,000 citizens in the Tulsa area. In addition, Citizens Bank, A leading bank in the northeastern United States with over 1,000 branches added Safety Connection Pro in order to drive a quantifiable improvement in operational efficiency. In the federal government space, we continue to advance Everbridge's position as the leading CEM provider by achieving more FedRAMP authority to operate certifications, or ATOs for short, for our solutions than any of our competitors. In the first quarter, we grew our relationship with the U.S. Army as well as expanded our relationships with both the U.S. Air Force and the U.S. Navy. During the quarter, we signed a meaningful contract expansion with the U.S. Army's Jarvis program. As many of you may recall, the Joint Analytic Real-Time Virtual Information Sharing System, or Jarvis, represents one of our largest customers overall and an anchor customer for our federal program. Jarvis primarily focuses on anti-terrorism and other security threats, such as active shooters and natural disasters that might affect DoD operations. Since the outbreak of COVID-19, Jarvis has also been supporting ongoing threat analysis of the pandemic, giving Army commanders and other DoD users critical insight into the impact of COVID-19 on global operations across 400 military locations in 70 countries. Our expanded agreement extends this program beyond the U.S. Army to now include support for the Air Force as well. Our federal activity in the quarter also included a significant expansion of business with the U.S. Navy, growing our combined business with another military branch to over seven figures. Turning back to the enterprise business, we delivered a strong customer ROI with a CEM supply chain implementation in the medical market. a leading manufacturer of continuous glucose monitoring systems, chose Everbridge to mitigate the impact of supply chain risks on their global operations. Our Q1 results also demonstrate renewed activity in markets negatively impacted by COVID, such as the return of healthcare purchases. For example, to support their IT systems readiness, New York City Health and Hospitals expanded their IT alerting capabilities while maintaining secure HIPAA-compliant communications. Another healthcare example from Q1 was Alexion, a global biopharmaceutical company who expanded their use of IT alerting. And speaking of IT alerting, we continue to expand our support for next-generation enterprise-wide digital and physical fusion centers. For example, our just-closed acquisition of xMatters will help accelerate digital transformation across IT service operations, cybersecurity, and DevOps incident response. In an increasingly digital world, with dramatically more remote employees, the rapid expansion in interconnected devices and systems, and rising instances of damaging cyber attacks, IT organizations for large enterprises and governments are under more pressure than ever to accelerate their digital transformation while providing solutions for IT resiliency and uptime. By combining forces with X Matters, we believe EverBridge can help organizations discover IT issues more quickly, assemble responders, apply remediation code, manage patches, and drive continuous improvement with analytics, significantly increasing an organization's ability to recover from critical digital events to keep their businesses running faster. In fact, this combination further strengthens the industry's most compelling end-to-end CEM platform, to identify, assess, and manage critical events that can impact an organization's digital and physical assets. Together, our capabilities provide the most compelling IT and cybersecurity solutions for CIOs at the largest Fortune 500 enterprises. Turning to our metrics for the quarter, our performance clearly reflects the result of our land and expand strategy with large new customer wins, multi-product expansions, and continuing demand for higher ASP products, particularly our CEM solutions. We added 135 net new enterprise customers in the first quarter, slightly above our target range of 110 to 125, increasing our total enterprise customer count to 5,748. 11 customers selected or expanded to CEM, raising the total number of CEM customers to 139, a 62% increase in the number of CEM customers from a year ago. While this demonstrates excellent momentum, it also highlights our significant opportunity for continued expansion at existing customers. As in the fourth quarter, our momentum with large transactions continued in Q1 with quarterly ASPs that were over $100,000 again. This produced an increase in our trailing 12-month ASP metric to $86,500 in the first quarter, a new record. Contributing to this ASP growth, we closed 45 deals valued more than $100,000 per year, a high watermark for our first quarter, including a record number of deals that were valued at more than $500,000 per year, more than doubling the number of deals greater than a half a million dollars from the prior year period. From a product mix perspective, A record 66% of new and gross sales over the last four quarters came from new products, reflecting high demand for our newer applications, as well as continued appetite for our core products. Our international business also continued to post strong growth results in Q1, with 30% of total revenue coming from outside the US, compared to 20% a year ago, representing a record high mix of international revenue. New customers that led this growth included the vaccine distribution program I already mentioned, one of the largest real estate projects in Riyadh, Saudi Arabia, as well as a 100-acre city within a city campus in Southeast Asia. Our revenue mix by vertical was relatively consistent, with 63% from corporate, 26% from local, state, and countrywide government, and 11% from healthcare, reflecting growth across all of our target markets. As always, we remind you that quarterly metrics can fluctuate, but that the longer-term trends continue to reflect our overall business momentum. These outstanding metrics demonstrate the growing market acceptance of our overall CEM strategy, as well as our ability to close larger transactions from our pipeline as organizations increasingly embrace CEM to address a multitude of high ROI use cases. Consistent with our mission to keep people safe and organizations running faster, Global impact investors increasingly recognize Everbridge as an organization that utilizes our technology platform to address some of the most challenging issues of the day in order to help make the world a better place. Our mission-driven organization also earned recent recognition across several categories, including best outlook, best place to work, best sales teams, and best global culture. In a competitive technology market, Our culture and reputation enable us to continue to attract strong talent. Now, turning to the future, later this month, we will continue on our Road to Recovery series of executive thought leadership symposia, which draw audiences from a wide range of industries and markets from around the world. Please join us on May 26th and May 27th as Bill Clinton, the 42nd President of the United States, keynotes our first summit in 2021. Bill Clinton will be joined by numerous additional global leaders, luminaries, and experts, including former Secretary of State Madeleine Albright and Steve Forbes, Chairman and Editor-in-Chief of Forbes Media. Also presenting are Dr. Judy Monroe, Chief Executive Officer for the Centers for Disease Control Foundation, and Dr. Jay Butler, CDC Deputy Director for Infectious Diseases. Additionally, senior sports executives from the NBA, Major League Baseball, the Olympics, and Premier League Football, or as we say in the United States, soccer, will share their insights on the future of sports in a post-pandemic world. With the participation of C-suite executives from Fortune 500 companies and board directors, this summit promises to be an illuminating event, which we look forward to sharing with you. In summary, we started off the year with an exceptional first quarter results. During 2021, we will build on our success of advancing our CEM and public warning solutions to enable organizations around the world to keep people safe and their operations running. We're proud of our accomplishments and believe the best is yet to come as we continue to penetrate and serve a multi-billion dollar market. Now, I'll turn the call over to Patrick for more details on our first quarter financial performance, and our guidance for Q2 and the full year 2021. Patrick?