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spk12: Good day, and welcome to the Everbridge Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero. After 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 that this event is being recorded. I would now like to turn the conference over to Joshua Young. Please go ahead.
spk07: Thank you, Tom. Good afternoon, and welcome to Everbridge's earnings conference call for the second 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 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. The 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, August 9th, and should not be considered representative of our views of any subsequent date. We explicitly disclaim any obligation to update any forward-looking statements or our outlook. Also, during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of our GAAP to non-GAAP financial measures is included in our press release. With that, let me turn the call over to David for our prepared remarks. David?
spk01: Thank you, Joshua, and thanks to all of you for joining us today. We delivered excellent second quarter results, building off the strong momentum that we established in the first quarter. Both revenue and profitability exceeded our guidance, and we achieved a number of new records that reflect growing demand for our CEM suite and our public warning solutions. The COVID pandemic brought the concept of enterprise resilience into the lexicon of executive boardrooms around the world, and it continues to raise the priority of critical event management for companies, governments, and other organizations. Years ago, we saw the need to manage a globally distributed workforce, and that's why we created our travel and remote worker solution, Safety Connection, and made it a cornerstone of our CEM suite. Today, organizations are finding that safety connection is perfectly suited to serve them as companies adopt work from wherever you are and hybrid work location policies. Our next frontier of innovation responds to the increasingly blurred line between digital and physical threats. For example, the recent ransomware attack that led to gas shortages on the East Coast illustrates how what starts as a digital event can also have physical ramifications. As a result, we continue to push the envelope on innovation. We are building on the IP and best practices we've developed over 20 years across thousands of enterprises in the corporate, government, and healthcare markets, and recently established the first and only proprietary standards framework to define global best practices for enterprise resilience. the CEM certification program. Fortune 500 industry leaders are among the first organizations who have already earned the Best in Enterprise Resilience designation, and many leading brands have since embarked on the process of CEM certification. During the second quarter, we saw clear signs that organizations are thinking beyond the COVID pandemic. as demonstrated by the strong upturn we saw for larger transactions in key verticals and across multiple use cases, such as the future of work and travel-related applications. Since our founding nearly 20 years ago, our mission has been to keep people safe and organizations running faster. In parallel, we have also witnessed a growing intensity and number of threats, including extreme weather events, man-made violence, and digital threats, such as complex cyber attacks and IT outages. With recent events that include massive forest fires in Oregon, flooding in Europe and India, and hurricanes impacting the East Coast and the Caribbean, as well as cyber and ransomware attacks around the globe, our mission has never been more important. Organizations are recognizing the need for a CEM solution to mitigate the impact of these on their people, processes, and assets. In particular, I'd like to acknowledge our teams that are helping to support those impacted by the forest fires on the West Coast, burning hundreds of square miles. We've been actively supporting statewide initiatives across a variety of jurisdictions to help respond to the fires and keep people safe. Our Q2 results demonstrate the growing interest in our CEM and public warning solutions. driving revenue in the second quarter to $86.6 million, an increase of 33% from a year ago and above our guidance. This revenue beat helped drive adjusted EBITDA to a little over a half million dollars, which was also above our guidance. The combination of these financial results and our momentum in closing CEM deals has give us the confidence to once again raise our revenue and adjusted EBITDA guidance for full year 2021. Last quarter, we highlighted our growing pipeline of larger deals amid the reopening of businesses, schools, and other institutions. I'm pleased to report that we are executing well and closing these large transactions, including a record quarter for CEM wins and a new high watermark for the number of deals over half a million dollars. Both of these drove an increase in our overall average selling price, which nearly doubled from a year ago for the quarter. In fact, we reached all time highs for ASPs on both a quarterly and trailing 12 month basis with both above $100,000. Our land and expand sales model continues to drive our growth. We closed 19 CEM transactions in Q2, which was a quarterly record. These CEM deals included a healthy mix of new customers adopting CEM and existing customers expanding to the full CEM suite. And perhaps most importantly, we saw substantive success in our growing CEM channel program within the quarter, demonstrating the expansion of our CEM go-to-market strategy and adding new customers that included a leading mobile retail store operator and an innovative cloud and digital transformation services company. This partner success represents an important turning point in expanding the global reach of our CEM platform in a way that complements our direct sales efforts. Additionally, a broad cross-section of our target markets continue to drive our recent CEM success. Overall, our second quarter CEM successes included organizations like one of the largest health insurers in the United States and one of the top 10 biopharmaceutical companies, who both became new Everbridge customers in the quarter by adopting our CEM suite and deals that were among our top five largest transactions in the quarter. Another CEM win involved senior leadership at a Fortune 50-ranked health insurer who was looking for a technology partner that could enable their commitment to keep associates safe regardless of location during a time of increased risk. They selected Everbridge CEM for their new fusion center to meet these needs. Similarly, a top 10 biopharma company, an S&P 100 member, discovered that their homegrown critical event management solution was unable to support the growing number of use cases that they wanted to implement. They realized that with EverBridge, they could quickly deploy a solution to keep their employees safe, as well as deliver a high return on investment, or ROI. Other CEM suite customers in the second quarter included one of the top global cybersecurity leaders, Fortinet, who chose CEM to improve business outcomes and support their near and longer-term growth ambitions. As a global leader in broad, integrated, and automated cybersecurity solutions, we're excited to see Fortinet deploy Everbridge CEM for their expanding global footprint. and to unify its building access systems across a common physical security integration management solution. And speaking of cybersecurity, with cyber and ransomware attacks regularly making news headlines, our timing for executing the acquisition of X Matters could not have been better. Our integration plans are on schedule, and the combination of EverBridge and X Matters solutions to deliver the leading digital and physical critical event management platform is already performing ahead of our initial expectations. And we expect this trend to continue. For example, in the second quarter, one of the largest financial services organizations in the United States chose Everbridge when they needed an enterprise grade digital security solution to manage major incidents. This financial services firm is leveraging our global reach and scale out-of-the-box integrations, automation, and orchestration across multiple tools for major incident management across their operations. Despite closing the X Matters deal in the middle of the quarter, we're already seeing positive momentum, which illustrates the power of combining the CEM Suite and our enhanced digital capabilities. For example, in Q2 and within weeks of completing the acquisition, We were able to identify and close a new logo sale with managed detection and response leader eSentire, who chose X Matters Digital Security in conjunction with our CEM Suite. Our continued emphasis on LAN and Xpand resulted in a number of existing customers adding multiple new applications to become CEM Suite customers in the second quarter. These customers included a NASDAQ 100-ranked architectural, engineering, and construction software leader who upgraded to CEM in order to reduce response times from hours down to minutes. Last year, Panasonic North America, one of the world's largest electronics, appliance, mobility, and energy companies, became an Everbridge customer, selecting our risk center solution. In the second quarter, they broadened their vision to increase efficiency and close security gaps in by expanding to the CEM suite. First Republic Bank, a leading private bank serving high net worth families, first became an Everbridge customer with Risk Center last year, and then expanded to a full CEM suite after recognizing the value of a broader enterprise solution in the second quarter. Following our high-profile win with Tesla last year, in the second quarter, we closed a deal with Rivian a new electric vehicle manufacturer based in Michigan whose environmental health and safety team previously adopted Everbridge Mass Notification and Risk Center. In order to consolidate risk management and mobile workforce safety by deploying a global security operations center, Rivian expanded to CEM in the second quarter, enabling them to meet both their current and future strategic objectives. We also expanded our CEM footprint into the higher education market, reflecting our ability to attract leading brands in all categories. Johns Hopkins University, the first research university in the United States, was looking for a way to monitor threat and risk data in order to alert students, faculty, staff, and traveling home care workers of dangerous situations in their areas. They chose CEM to do just that, becoming Everbridge's first higher education CEM customer in the process. In addition to a record-breaking number of CEM deals in the quarter, we closed several large transactions that reflect the future of work with distributed workforces. For example, SAP America selected Safety Connection Pro and Risk Center to become an Everbridge customer in the second quarter. SAP's long-term vision aligns well with our CEM capabilities to manage threats across the enterprise through a single pane of glass. Additional customers who added capabilities like safety connection or risk center to support the future of work included PPL Services, the electric utility serving 1.4 million customers in Central and Eastern Pennsylvania, a Tier 1 multinational insurance company, and a leading CAD software pioneer and market leader, just to name a few. The second quarter also saw continued strong demand for our public warning solutions. We are the global leader in population-wide public warning, with solutions used by over 1,500 municipalities, counties, cities, states, and countries in every major region of the world, including more European countries than any other provider. During the quarter, we extended this leadership by signing a countrywide deal with Estonia. who Wired Magazine has named the most digitally advanced society in the world. In a country where 99% of government services are available online, Estonia required a system that supports multiple robust and reliable means of alerting the public to threats, such as severe weather, forest fires, and viral pandemics. They chose Everbridge because we could meet their stringent needs for a public warning system that is easy to use, secure, and comprehensive. This win illustrates our time to value benefit as we were able to meet Estonia's very tight implementation schedule. Our win in Estonia also highlights that countrywide public warning deals for Everbridge can serve governments at the front end, carriers at the back end, and potentially both. In the case of Estonia, all three carrier networks will also deploy our solution. European wins, such as Estonia, as well as our previous wins in Sweden, Netherlands, Norway, Iceland, and Greece, continue to position Everbridge as the leading population warning solution. Our Estonia win is also a strong reference for other European Union member countries who are evaluating solutions to help them meet the EU-wide mandate for population warning systems. We are actively responding to RFPs and are excited about the opportunities ahead of us. In addition to new wins, our recent successful public warning deployments, such as the new National Public Warning System for the United Kingdom, will both help to protect over 100 million residents and visitors, as well as serve as an excellent reference. Another important public safety win in the quarter was the Swiss Canton of Vaude, which includes Lake Geneva, a busy tourist destination, who selected Everbridge to consolidate more than 100 services for the fire brigade, police forces, ambulance services, and emergency medical services for the Canton's entire population. This deal demonstrates our powerful network effects when our platform extends across multiple stakeholders in a community. We also saw several wins at the city, county, and state level in geographies around the world, including the Middle East, where network effects are a meaningful driver of our expansion. We've gone from almost no presence in this region in this region just a few years ago to having a presence at over 60 customers and 90 sites across several countries in the Middle East today. In the US federal market, we continue to leverage our strong FedRAMP position with more authority to operate certifications or ATOs than any of our competitors and customers across numerous federal agencies and departments. One such win from the second quarter was a six-figure IT alerting transaction with the Federal Reserve Board of Governors, the governing body of the U.S. Federal Reserve System. FRBG oversees the nation's monetary policy and ensures the safety and stability of the financial system, and they wanted a solution to help speed up incident response. and the ability to connect to numerous systems as part of a very sophisticated technology stack that interacts with the Federal Reserve System, Department of Treasury, and private banks when necessary. Based on our security, scale, and proven reliability with other federal financial agencies, Everbridge IT Learning is going to be the focal point of their collaboration and incident response. With our FRBG win, Everbridge now supports every federal financial agency with at least one of our products. Turning to our metrics for the second quarter, our performance clearly reflects the result of our CEM strategy with large new customer wins, multi-product expansions, and continuing demand for higher ASP products driven by demand for our CEM solutions. We added 142 net new enterprise customers in the second quarter, increasing our enterprise total customer count to 5,890. A new high watermark of 19 customers selected or expanded to CEM, raising the total number of CEM customers to 158, a 61% 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 with existing customers. As in the first quarter, our momentum with large transactions continued in Q2 with quarterly ASPs that were over $100,000, driven substantially by our record CEM results. Our growth in deal sizes this year has also pushed our trailing 12-month ASP to above $100,000 for the first time to $107,000 up 59% from a year ago. Contributing to this ASP growth, we closed 60 deals valued at more than $100,000 per year, including another record number of deals valued at more than $500,000 per year, more than doubling the number of deals greater than a half million from a year ago, also driven by CEM wins. From a product mix perspective, a record 67% of new and gross sales over the last four quarters came from new products, reflecting growing demand for our newer applications. Our international business also continued to post strong growth results in Q2, with 28% of total revenue coming from outside the U.S. compared to 22% a year ago, as we expand our presence in every major region of the world. Our revenue mix by vertical was relatively consistent with past quarters, at 65% from corporate, 25% from local, state, and countrywide government, and 10% from healthcare, reflecting strong growth in the corporate market with increasing post-vaccine use cases. As always, we remind you that quarterly metrics can fluctuate, but that the longer-term trends continue to reflect our overall business momentum. These outstanding metrics demonstrate the growing market acceptance of our overall CEM strategy, as well as our ability to close larger transactions from our pipeline as organizations increasingly embrace CEM to address numerous high ROI use cases. In addition to the expansion of our direct global sales team, our growing number of channel partnerships further extends our sales reach worldwide. In the second quarter, Fortune 500 IT distribution and solutions aggregator TechData became one of the latest partners to enable customers to automate the response to critical events from cyber attacks and IT outages to severe weather events and more, and to build resilience against such occurrences. Our partnership with WizNucleus, also announced in the second quarter, provides us with deep vertical domain expertise in the nuclear, electric, and utility industries. The recent Colonial Pipeline ransomware attack is just one recent example of the disruption in cost that can be associated with cyber attacks on critical infrastructure. Our digital and physical critical event management solution leadership, enhanced by our integration of X Matters and then combined with the WISNucleus software suite, enables critical infrastructure providers to address dynamic cyber, physical, and emergency management threats much more effectively. In fact, a large U.S. nuclear plant recently selected our combined solution to replace an existing system with our new physical security integration management to comply with industry regulations while also enabling more rapid adoption of new security technologies in the future. And just today, we announced a partnership with the Associated Press, or AP, which augments and enhances our more than 25,000 risk-centered data sources. With this partnership, the AP adds further context to risks breaking in geopolitical news into our CEM platform. This will provide our customers with enhanced contextualization of risk data, leveraging the reporting speed and deep expertise of AP journalists in 250 locations across 100 countries, enabling our customers to better evaluate the potential impact of threats on their people, processes, and assets. As a global pioneer and creator of the CEM category, we regularly aim to bring together leaders from around the world to drive thought leadership and innovation. Our strong market position helped us attract thousands of executives from around the globe to the most recent installment of our Road to Recovery series of executive thought leadership symposia in May. Luminaries, C-level executives, and experts presenting included President Bill Clinton, former Secretary of State Madeleine Albright, Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, as well as CDC Foundation Chief Executive Officer, Dr. Judy Monroe, and CDC Deputy Director for Infectious Diseases, Dr. J.C. Butler, as well as a special address by Director General of the World Health Organization, Dr. Tedros. If you missed the event, replays of keynotes on topics ranging from leadership at a time of crisis to assessing risks and building organizational resiliency are still available on demand. Finally, we recently launched the first and only global certification program for critical event management. This new initiative provides an assessment of an organization's readiness and resilience ahead of the next pandemic or critical event, whether it's digital or physical. Leveraging 20 years of best practices and know-how, serving nearly 6,000 enterprise customers, the assessment provides a ranking of how the organization compares to those following the latest industry best practices, which companies can share to attract and retain customers, partners, and employees. Some of the biggest brands in the world have already adopted CEM certification. such as financial services giants Goldman Sachs and Discover, mass media and entertainment conglomerate NBC Universal, multinational chemical corporation Dow, and global pharmaceutical leader Alexion, which was recently acquired by AstraZeneca. All of these leaders have attained Best in Enterprise Resilience designation. To do so, these organizations met or surpassed benchmarks in key measurable areas, demonstrating their commitment to enterprise resilience. Enterprises who go through the certification process are delivered a comprehensive analysis, including details, covering what they can do to raise their preparedness and resiliency to today's standards, a top priority for boards and C-suites. As a CEM visionary and pioneer, we believe Everbridge is well positioned to become the de facto standard for enterprise digital and physical threat preparedness, protection, and mitigation. In summary, we are excited about our progress at the midpoint of the year with momentum from CEM and public warning, growing demand for combined digital and physical resiliency solutions, and expanded use cases for the future of work. We're looking forward to sustaining our momentum in the second half of the year as we continue to execute on our strategy to penetrate and lead a multi-billion dollar market. Now, I'll turn the call over to Patrick for more details on our second quarter financial performance, as well as our guidance for Q3 and full year 2021. Patrick?
spk11: Thanks, David. We had another very strong quarter with record revenue of $86.6 million, an increase of 33% from a year ago, and above the high end of our guidance range. Our net retention rate continues to track above 110%, reflecting consistently strong customer satisfaction 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 72.5%. relatively consistent from a year ago, with the short-term impact of acquisitions offset by efficiencies from greater scale. Total operating expenses in the quarter were $64.7 million, an increase of 40% from a year ago, reflecting continued investments in our platform and our go-to-market strategy. Adjusted EBITDA was $515,000, well above the high end of our guidance range, due primarily to the revenue upside in the quarter. Net income in the second quarter was $1.5 million or 3 cents per diluted share compared to net income of $1.2 million or 3 cents per share a year ago. On a gap basis, our net loss was $33.8 million. Looking at our balance sheet, we ended the quarter with $568.3 million in cash, cash equivalents, restricted cash, and short-term investments compared to $743.2 million at the end of the first quarter reflecting cash used to acquire X matters, and seasonal cash flow patterns during the quarter. Operating cash flow was an outflow of $5.1 million, and free cash flow was an outflow of $9 million. Total deferred revenue was $210 million at the end of the quarter, an increase of 51% from a year ago. As we note every quarter, our deferred revenue balance at the end of any given quarter can vary due to a number of factors, including the timing of significant new contracts and the timing of annual billings for new and existing customers. 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 trend and that our longer-term performance continues to support our growth objectives. In addition, we continue to have eight figures in uninvoiced backlogs, In other words, backlog that is not in deferred revenue, which reflects contracts that have been signed, but whose revenue will be recognized in future periods, along with being invoiced in future periods. Now, I'll turn to our guidance for the third quarter and full year, which includes the impact of our second quarter outperformance and our continued business momentum. For the third quarter, we anticipate revenue of between 94.1 and 94.5 million dollars representing growth of 32 to 33%. We anticipate adjusted EBITDA to be between negative 2.1 and $1.7 million. We anticipate a non-GAAP net loss of between 5.7 and $5.3 million, or a loss of between 15 and 14 cents per share based on 38.3 million basic and diluted weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $19.8 million in the quarter. For the full year, we now expect revenue to be in the range of $362.8 to $363.8 million, representing year-over-year growth of approximately 34%. We anticipate adjusted EBITDA will be in the range of $8 to $8.8 million. We expect a non-GAAP net income of between $0.5 and $1.7 million, or between one and four cents per share based on 38.2 million diluted weighted average shares outstanding. This guidance assumes estimated stock-based compensation expenses of approximately $66 million for the year. And we continue to anticipate that free cash flow will be approximately break-even and perhaps slightly positive for the year. In summary, we're enthusiastic about our second quarter performance and believe that we have strong momentum going into the second half of the year. Now, operator, We'd like to open the call for questions.
spk12: We will now begin the question and answer session. To ask a question, you may press star then one 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 two. We ask that in the interest of time, you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. And the first question comes from Will Power with Baird. Please go ahead.
spk06: Hey, guys. Thanks for taking the question. This is Charlie Ehrlich on for Will. Congrats on the great results and that great CEM number, too. And you mentioned that the channel program was key to the success there, and that CEM number. I was hoping you can expand a bit on the channel program. Is the channel an area you plan to invest more in, or do you feel like you're pretty well penetrated in the channel at this point? Thanks.
spk01: Hey, Charlie. This is David. Thank you so much for the question. And, yeah, when I first joined, we talked about our intention to increase our routes to market through partnerships, channel, indirect, And we've been building up that capability over the last several quarters. And we're seeing the flywheel starting to spin faster and faster now. And it had a material impact on the total number of CEM deals that we were able to close this quarter. And I think it's great that you're keying on that because Q2 is usually not our best CEM quarter. Typically, our last record was on a Q4. So the fact that we set an all-time record with 19 CEM deals in a Q2 is really significant and something that we're very excited about. And then furthermore, you're seeing that then translating into our number of large deals with 167% increase in our 500K plus deals year over year and a record number of 200K plus deals as well for the quarter. So a lot of good traction around CEM overall.
spk06: Great. Thanks very much.
spk01: Thank you.
spk12: The next question comes from Scott Berg with Needham. Please go ahead.
spk08: Hey, guys. This is John for Scott. I appreciate you taking my question. Just first on the AP relationship, how should we think about that from a sales perspective? Will this add any extra opportunities that you weren't able to attack previously? And what kind of impact do you think it will have on win rates? Thank you.
spk01: Hey, John, thank you so much for the question. We just announced the AP relationship today, and it's one we're very excited about. We continue to associate ourselves with some of the biggest and the best brands on the planet Earth. AP has a very unique capability with 250 locations around the world where they have people on the ground in 100 countries, and they just have great access to information which is differentiated It's just one of the 25,000 data feeds that we have coming in to our CEM platform. So if you want to have situational awareness, you know, minutes matter, seconds matter. The ability to know exactly what's going on and have situational awareness around things you care about, your people, your assets, your supply chain, supply routes, your brand and reputation, and things that could threaten that. That can be the difference between a successful mitigation response or not for a company or for a government or healthcare organization for that matter. We think our strategy of aggregating high-quality data partners and then curating all of that data and turning it into actionable intelligence and actionable information across a single pane of glass, which is our visual command center. is the right strategy and we're getting really good validation of that with partnerships like the AP. It does allow for, there's more options on things that customers can can buy, so it does open up some opportunities. I think there's going to be potential for joint go-to-market and cross-sell, up-sell. So it's just one of many we felt it was worth announcing because AP is excited about it, we're excited about it, and because of the power of the brand and the global appeal that they bring. But this is part of a larger product ecosystem strategy, which ties into what we talked about earlier with partnership, and we're getting really good traction.
spk03: Great. Thank you. Congrats on the quarter. Thank you. The next question comes from Matt Stotler with William Blair.
spk12: Please go ahead.
spk04: Hey, thanks for taking my questions. I guess the first one, you know, I'll go ahead and ask the Billings question. Obviously, there's a lot of questions around Billings when you see deceleration, but obviously some really, you know, pretty significant outperformance, strong results in that from the quarter. We'll have to just kind of dig into that in terms of, Any notable contributors or drivers? Obviously, you know, you've talked about this kind of unrecognized backlog, and I know there's some big deals in there. Anything pulling through there that you can speak to? Is this, you know, whether on the countrywide side or otherwise, or is this, you know, more of just the strength you saw on CEM kind of hitting deferred revenue in the quarter? Anything that you can share on that probably would be helpful.
spk01: Yeah, Matt, thanks. I'll do a first cut and then hand it to Patrick. But I think the number one driver this quarter, the headline is record number of CEM deals led to record number of 500K plus deals, record number of 200K plus deals, and that you're seeing the effects of that kind of flow through a lot of our metrics. So that's probably the number one driver for the quarter to focus on. As far as the, you know, we talk about the, what we call backlog, which are deals that are contracted but don't show up in deferred. that's a pretty significant number. And, Patrick, why don't you talk about it? I don't think that's what's driving it. In fact, it's probably gotten bigger. But, Patrick, why don't you jump in on that?
spk11: Yeah, well, that uninvoiced backlog is not in deferred, and therefore it's not hitting anyone's calculations and billings. That uninvoiced backlog number is now in the mid to high teens. It's grown sequentially quarter over quarter due to wins such as Estonia and some other deals. So we're excited about that and the ability to convert that into revenue over coming quarters. And one other thing to mention, I think it's folks do their billings calculations, which, you know, as Matt, you and others know, we don't point people to, but I know that sometimes it can be confusing. So I'll go ahead and call out that you'll see in our 10Q that X matters contributed $34 million to our deferred revenue. That's a combination of short-term and long-term, a significant portion of that is long-term because they're able to collect for multiple years up front. So that $34 million relates directly to X matters.
spk04: Got it. That's a super helpful color. And then maybe just one on 9-1-1, right? I mean, it's something that we've kind of talked about for years, going back to the ATOS, the originations of the ATOS partnership and being able to kind of partner with them to be brought into this larger next-gen E911 project that the state of California was doing. But since then, obviously, you acquired Red Sky earlier this year. Obviously, there's this interesting partnership with RapidSOS that you guys have mentioned. We'd love to just maybe, if you could touch on maybe the initiatives with broader next-gen 911 projects how critical those capabilities are to the platform, and maybe what your vision is for your E911 capabilities going forward.
spk01: Yeah, it's a great question. So you're right, you're connecting all the dots, everything that's happening from our partnerships, what we're building out with the platform. It goes back to the network effects that we talk about, you know, critical event management across both the private sector and the public sector. The 911 system is one that's really ready to be – And it touches the lives of everyone in the United States, and there's opportunities around the world as well. So when there's something that happens with a 911 call, there's a lot more data that you'd like to have than just what that person can share on the phone conversation verbally. RapidSOS is really a leader, and they've invested quite a bit of money over years building out really significant capabilities in this space. And so you're putting two leaders together, And we're very excited about our potential to help companies that have to follow increasing regulatory guidelines or just best practices around duty of care for people that work for them, as well as the public sector that benefits and the first responders that benefit from having better access to real-time information and data to support what's going on. And it really, truly can save lives. So, you know, we announced the partnership with RapidSOS and kind of unveiling the NextGen 911. We're going to have more to say about that in future quarters, but we're very excited about where that can go. And we've gotten tremendous feedback from both companies and public sector prospects after our announcement. Thank you.
spk03: Great. Thanks again. The next question comes from Brian Peterson with Raymond James.
spk10: Please go ahead. Hi, this is John Messina for Brian. Just real quick on the corporate opportunity in Europe. You know, it's been mentioned a few times about the flywheel effect that you've seen in states like Florida where that helps drive new business in the state. Just curious how that's playing out internationally, and would we expect corporate demand to follow some of these potential wins we've seen? Just really interested how you're thinking about Europe playing out.
spk01: Yeah, John, thank you for the question. I think it's a key moat around our business that over the long term I think is going to position us exceedingly well. And we're definitely seeing it happen around the world, not just in Europe. For example, in Singapore, you know, you start with the front end of the government, you get the carriers, you get financial services, manufacturing, and you start to get other key vertical leaders. And you just see it light up on the map. And we're seeing it now in the Middle East as well. So, obviously, in Europe, we've got a really good footprint, and we launched CEM in Europe, and we're getting traction and adding more corporate customers there. So, one of the things we're doing is putting together playbooks on how do we take a process that happens organically anyway, but how do we accelerate that, and how do we use our marketing and thought leadership to make it happen faster. So that's something that we're trying different things with and as we continue to get traction there, I think it just makes our results that much better. So really appreciate the question. Thank you.
spk03: Thank you.
spk12: Again, as a reminder, if you would like to ask a question, press star then one to join the queue. The next question comes from Mike Walkley with Canaccord Genuity. Please go ahead.
spk02: Great. Thanks for taking my question. David, just more of a high-level question for you. I would think needing to track all remote employees with a lot of companies being remote work and the various risks as employees are more spread out plays well into demand for your solutions. But some companies are trying to get people back to work. How can you help them given the different health and safety protocols that can vary by state and even by county within states? And is it better for your business model if things stay more remote or if people start to return to the office or are they both drivers?
spk01: Yeah, Mike, thank you for the question. It's a really fundamental question. And the answer is all of the above. We're an enterprise-wide platform, and we support all the use cases. So we have hundreds of out-of-the-box integrations. So just for example, if you come into the office and you've got thermal cameras deployed to take people's temperatures coming in, We're integrated to those thermal cameras. So if you walk in and you've got a fever, you've got a mobile app in your pocket. Say, hey, you've got a fever. Go work from home and get a COVID test and potentially quarantine, isolate. We're also integrated with the physical access control system, the travel management system, the calendaring system. So we can say, all right, David's got a fever. He's been exposed to 10 other people in the office in the last week. Let's send them a message. Tell them to work remotely. Get a COVID test. This is all happening. It can happen in seconds or minutes as opposed to having the state contact tracers spend the next days trying to call around and do contact tracing. So it's really a next generation digitally transformed way of doing contact tracing for the employer to help them mitigate the risk as the virus spreads. It has hotspots, goes up and goes down. We're able, if you're a multinational, and as many of our customers do, they've got offices all over the world, all over the United States. Everyone has different guidelines about what the rules are. The system's able to keep track of that in an automated way, help with enforcement. We're tied into the physical security information management system for the building. So if you've got guidelines on how many people should be in a particular space around social distancing in a meeting room, the system can help report on that and enforce that. So there's just so many use cases around how do I get people back to the office safely? And the reality is it's going to be some form of hybrid. So I'm going to have some people in the office, some people remote, and the ability to keep track and manage that across all of those populations with one single pane of glass, one platform, that's really a big part of the value proposition. And our customers really seem to appreciate it. In fact, we're using it for ourselves as we're managing our own So it's a great question, fundamental, and I think this is what we built the platform for, and I think we're ahead of everybody else on that.
spk02: Great, thanks. And just a follow-up question for Patrick. Congratulations on all the large deals and the CPM deals in particular. Very strong start to the year, but some things pulled into the funnel, or do you still see strong trends for large deals in the back half of the year? And given the record deals and increasing ASPs, Is dollar-based net retention trending higher, and maybe we hit a new metric that it might be above going forward?
spk11: Thanks, Mike. We didn't necessarily pull things into Q2. Rather, we were just really thrilled with the performance in Q2, and we are really excited about what the second half looks like. We've been building the business for a long time here to increase our value proposition and therefore our ASPs. And that's a metric that isn't going to go up and to the right every single quarter, but when you zoom out and you look at the trend, we're excited about it and we expect that it'll continue to head that way over time. And what was the last part of your question?
spk02: I was just curious, you shared dollar net retention of 110%. I was just curious if it was getting to a higher level maybe.
spk11: Well, we have bounced around much higher than 110%. And as we continue to drive a stronger value proposition and focus on landing, sometimes we land with a lot. And then when we come back around and expand, it can be many quarters down the line. In other cases, it'll happen faster. So we've got a blend across businesses and geographies. I think as we continue to focus on a huge lever for us over the next many years, which is continuing to sell into the base, you'll see potential for greater strength in that figure. And if we are continuously exceeding something like 125%, then we will call that out. But for now, given that it tends to, to oscillate up and down a little bit. We'll just stick with reminding folks that it is greater than 110%. Fair enough.
spk03: Thanks, Patrick. Yep. The next question comes from Parker Lane with Stiefel.
spk12: Please go ahead.
spk05: Yeah, hi, guys. Thanks for taking my question. Congrats on the quarter and a really diverse, solid set of CDM wins. You think about the opportunities here for the remainder of the year and going forward, are there any particular verticals that you're seeing are most receptive to the CEM value proposition right now that you could potentially throw some extra sales resources behind?
spk01: Hey, Parker, thanks for the question. Yeah, we saw a pretty broad-based strength on CEM, and I think it was a reflection of notwithstanding the Delta variant, with the vaccines becoming more prevalent, companies are starting to open up and look at kind of broader term things that they need to do going forward. So we saw some really encouraging signs. Healthcare has been really tough, vertical for us during COVID because most of our customers were really focused on dealing with with the crisis, and we started to see some big deals come back there. Other sectors, you know, we've been really busy helping retailers kind of reopen, and we've had surprising traction with the retailers throughout COVID as we've been helping them. The tech sector has been great. We've been, you know, big customers, mid-market. It's been pretty broad-based, to be honest with you. So everyone's thinking about this now. It's just a big topic. and now's the time for them that, you know, they know they've got to do something, and now they've got a little bit more bandwidth to do something more strategic.
spk05: Yeah, makes sense. Quick follow-up for you, Patrick. On the deferred revenue front, would it be fair to say that X Matters is the primary factor behind the nice sequential jump in non-current deferred revenue, and should we expect that trend to continue going forward?
spk11: Well, yes and no. So, the first question is yes. We've historically have not made a habit of chasing long-term deferred revenue, but instead prefer to try to keep the model as clean as we can and go one year at a time in terms of invoicing and collections. So yes, that jump, that sequential jump has everything to do with X matters. But going forward, we don't, like I said, I think over time as that bleeds down, I think you'll see a return to normal, which is a greater focus on current deferred rather than long-term.
spk05: Got it. Makes sense. Perfect. Thanks again, and congrats on the quarter.
spk03: Thank you. Thank you.
spk12: The next question comes from Koji Ikeda with Bank of America. Please go ahead.
spk13: Hey, guys. Really great quarter. Thank you for taking my questions. A couple from me. First one, on the tech data partnership, just curious here, they got 125,000 on their channel. So I guess what does it mean for the go-to-market strategy from your perspective? And I guess how does it also open up maybe potential new market areas, either up market, down market, or maybe even new verticals?
spk01: Thanks, Koji. Yeah, great question. I think tech data and more broadly across our partnership is It's great when you can get thousands of people selling your solution in addition to the dedicated sales force you have. So there are definitely areas where, you know, it's really helpful to get extra coverage. So there's some parts of the world where we don't have as many sales people on the ground as we'd like. And so geography is a factor. As we've been selling bigger deals, kind of moving up market, trying to sell more to the C-suite, selling, you know, Fortune 1000, Global 2000, Some of the smaller customers now we can maybe more cost-efficiently pursue through some of these channel partnerships. So that's very helpful so we can kind of free up our dedicated resources to do the bigger ASP deals. And some of the what I call kind of product-led ecosystem partnerships, like we talked about with Nucleus, where we're getting very deep vertical industry expertise around critical infrastructure that we can put together with what we're doing and create a really – unique and differentiated proposition for the end customer. So those are some of the categories. And, you know, first we have to sign up the partners, and then we've made efforts in terms of getting better at how we enable our partners. So, you know, we sign them up, and then we go into the enablement phase, start to build funnel, and then you start to see the deals come through. So that's really gratifying, and we're starting to see more and more of that. Thank you.
spk13: Got it. Thank you. And just one follow-up, if I may. On the X Matters acquisition, is it possible to get the X Matters contribution to the revenue for the quarter? And really, given the positive commentary throughout the call, I mean, I guess are you expecting much more than the $9 million to $11 million in total revenue that you guided for X Matters earlier this year?
spk01: Yeah, Koji, it's a great question. So let me just give an update on what's going on with X Matters. One is we are probably ahead of schedule on getting them integrated with the organization, and we acquired a really tremendous team. They understand our space, and the strategic fit of digital plus physical is resonating well with customers. And so based on our internal expectations, what we thought we'd do on sales, we're doing better. And so we certainly are going to try to continue that. We are integrating. We did have an ITA business previously. So we're integrating those teams. They've already been integrated. So it is interesting in terms of which deals were already in the funnel, would we have won them anyway, not won them. So we're really not, and it's probably impossible to kind of break out going forward because we're putting the teams together. But our overall guidance reflects our view of the consolidated view going forward. And overall, we're very bullish on the acquisition, and the results exceeded what we thought prior to, you know, having gone through Sarbanes-Oxley and closing the deal and all that. Thank you.
spk13: Got it. Thank you. Thank you very much. Super clear. Thank you, guys.
spk03: Thank you.
spk12: The next question comes from Terry Tillman with Truist. Please go ahead.
spk09: Yeah, good afternoon, everyone, and congratulations from me, particularly on the CEM side. I guess I had a question in terms of the public warning opportunity. In the U.K., so I'd like to learn a little bit more about, so is this like long-term contracts with the three mobile operators, and what about on the front end? And then I had a follow-up.
spk01: Yeah, hey, Terry, thanks for the question. So, yeah, the U.K., we won the three contracts. Largest carriers, and we've implemented them in really record time, which is great, and so we were able to announce that. The front end is still a legacy front end, so there is a possibility at some point in the future that there could be an upsell on the front end side as well.
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