Everbridge, Inc.

Hello and welcome to the Everbridge third quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Patrick Brickley, Chief Financial Officer. Please go ahead.

Good afternoon and welcome to Everbridge's earnings conference call for the third quarter of 2021. This is Patrick Brickley, Executive Vice President and Chief Financial Officer of Everbridge. With me on today's call is our CEO, David Meredith. 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 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 this call reflects our perspective only as of today and should not be considered representative of our views as of any subsequent date. We explicitly disclaim any obligation to update any forward-looking statements or our outlook. Also, during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of our GAAP to non-GAAP financial measures is included in our press release. With that, let me turn the call over to David for his prepared remarks. David.

Thank you, Patrick. And thanks to all of you for joining us today. We delivered strong third quarter results that again exceeded our guidance for revenue and profitability. Revenue of $96.7 million increased 36% from a year ago. and both adjusted EBITDA and non-GAAP net income were positive for the sixth quarter in a row. Our strategic CEM and public warning platforms continued to be chosen by large enterprises across the globe to keep people safe and their organizations running, as evidenced by our record number of deals valued at more than a half a million dollars that we closed in the quarter, and a record international mix driven by CEM deals, public warning wins, and existing customer expansions. These strategic wins and expansions fueled our trailing 12-month ASP that exceeded $100,000 for the second quarter in a row, increasing by 41% from a year ago. As greater numbers of the global population become vaccinated against COVID-19, Organizations, schools, and governments continue to move towards plans for more normalized protocols. However, to avoid outbreaks that could impact people and operations, as well as meet guidelines and requirements promulgated by various governmental and health organizations globally, they will need solutions to manage the continuing risks related to COVID-19. Additionally, most enterprises continue to feel the effect of both natural and man-made critical events, such as the forest fires that have impacted the Western US and Australia, as well as an increasing number of digital threats, such as ransomware and other forms of cyber attacks and IT outages that can impact their people and processes. Furthermore, the global supply chain faces massive disruption, which can be mitigated in part by critical event management. As a result, our CEM suite continues to be increasingly relevant, and in the third quarter, we saw key CEM wins both in North America and internationally across all of the markets we target, corporate, government, and healthcare. We also recently extended our CEM certification program internationally to further establish ourselves as the clear leader in setting the standards for best practices against which organizations will be evaluated globally. Before I get into the highlights of the quarter, I want to acknowledge an important national development here in the United States. The recent passage by Congress of the historic $1.2 trillion infrastructure package presents a potential catalyst to unlocking funding opportunities and accelerating projects with federal, state, and local governments for our CEM for public safety solutions. Our capabilities can provide increased resiliency across a variety of strategically important categories, such as the modernization of the nation's emergency 911 and national warning systems. We continue to demonstrate our expertise and leadership in these areas with recent launches of new products and feature enhancements such as Everbridge 911 Connect and our recently announced integration with RapidSOS for providing more contextual data to dispatchers at the time of a 911 call, and our E911 capabilities to help direct emergency responders to the exact location of someone seeking assistance through multi-line telephone systems. As we announced yesterday, Cisco's WebEx calling and UCM cloud platforms can now leverage this E911 capability as well. Additionally, EverBridge public alerting systems can help support continuous secure collaboration for warnings across federal, state, local, and tribal governments during emergencies. When coupled with our recently launched next generation version of our Resonant Connection product, This enables local governments to reach a higher proportion of their residents in a critical event. Given our FedRAMP compliance status and growing footprint at all levels of government, Everbridge remains well positioned to benefit from increasing investments in infrastructure. Focusing now on our Q3 results, we saw continued strength in our critical event management business with key new and growth CEM deals around the globe. New customers in the quarter included North American game developer Ubisoft and medical technology leader Stryker, both of whom chose broad CEM suites, and leading international organizations such as one of the world's largest IT services companies based in India, who is also implementing our CEM suite. This important new win creates further expansion opportunities within this large international IT leader. as well as positions us to expand our CEM presence in India, where we have already had tremendous success with the widespread adoption of our public warning solutions. In parallel, we continue to see existing public warning and mass notification customers among our over 6,000 customers upgrade onto our CEM platform. In Q3, the CEM expansions included global banking giant Citizens Financial, as well as one of the largest global professional services firms, who has the potential to further expand in the future. Healthcare leader Hackensack Meridian Health, a top-ranked hospital system in New Jersey, who is already an IT alerting and wayfinding customer, expanded to become a CEM customer in the quarter. Finally, in the government market, the United States Department of Commerce chose our CEM platform to address gaps with bureau communication and situational awareness. Our successful combination of X matters into our larger suite of CEM for digital offerings extends our capability to support both digital and physical risks across a single pane of glass. This very powerful proposition differentiates us in the market. It also strengthens our broader land and expand sales motion, which leverages our full product portfolio to accelerate customer adoption and sell deeper into the enterprise. Social media giant Twitter is a great example of executing on this land and expand strategy. Twitter initially purchased mass notification five years ago. They had added safety connection two years ago. And in Q3, they expanded to CEM and will incorporate numerous data feeds to their fusion center, integrating digital and physical security. Pharma leader Takeda demonstrates an additional example of fusion centers driving our land and expand strategy with their commitment to further build out their global security operations center with CEM. Of course, winning new customers that have the potential to expand over time is an important element of this strategy as well. Some of these new customers in the quarter included pharma leaders Merck and Teva, global accounting leader BDO, and automotive retailer Discount Tire. On top of our US Department of Commerce CEM win, which was just one highlight from a very busy third quarter for government business, we signed several growth transactions with federal departments and agencies in the US and also closed a number of international deals. Among our federal wins in the quarter, the Muskegee Creek Nation Health System, which supports the fourth largest Native American tribe in the United States. Initially purchased Everbridge in February for vaccine distribution. In Q3, they expanded the contract to improve communications with their patients as well. We are also happy to welcome the Centers for Medicare and Medicaid Services as a new federal customer. CMS will leverage Everbridge to notify employees of cybersecurity training and warnings, COVID-19 updates, safety and compliance protocols, important human resources information, and to measure employee engagement. The U.S. Department of Agriculture's Office of Homeland Security leads security preparedness and response efforts to ensure USDA employees and stakeholders are prepared to support the agency's mission. They selected Everbridge to enhance their risk intelligence monitoring of key locations, both domestic and international, to keep ahead of any potential threats to the USDA. The Food and Drug Administration, or FDA, will be leveraging Everbridge Risk Center to monitor their physical locations across the globe to help ensure they have no gaps in situational awareness. Additionally, the Office of Protective Intelligence of the U.S. Marshal Service is following in the footsteps of the U.S. courts in their protective services efforts. With Everbridge, the Marshal Service can gather hyper-relevant data and insights to detect and protect from new and evolving threats. The U.S. Attorney's Middle District of Florida serves 35 counties across the state, which is over half the population of Florida. making the Middle District the second most populous U.S. Attorney District in the nation. Last quarter, they expanded their use of Everbridge Risk Center and added more locations to monitor, collect, and analyze threat data to better respond to potential risks in their offices and employees. In addition to our CEM and related progress, we recorded a number of important public warning wins to expand our global leadership position in this category. During the quarter, we received notification that we won another of the top five most populous countries in the European Union, or EU. Spain, with a population of 47 million. Spain shows our cell broadcast solution in a competitive bid process. As the leading provider of hybrid public warning solutions with cell broadcast, location-based SMS, and other 5G-compliant modalities across both government front ends and carrier back ends, we are increasingly seeing opportunities to leverage our land and expand strategy in public warning as we've done successfully with CEM. For example, in the third quarter, we inked a significant expansion in the Netherlands with our countrywide public warning system. At the same time, network effects where municipalities within a country also adopt Everbridge can multiply the number of opportunities as we've seen in Norway, Sweden, Singapore, and other countries. Our recent highly visible go-live in Australia further highlights our ability to support large-scale, complex, countrywide deployments that are having real impact for serious threats that countries are facing right now, and further emphasizes that Everbridge represents the most reliable choice for countries still looking for a public warning solution partner. Allow me to pivot from our strong top-line results to our overall execution. balancing both growth and profitability that delivered positive adjusted EBITDA that was also above our guidance range. Although the COVID-19 pandemic and an intensely competitive hiring environment continue to create uncertainty in the overall market, our ability to generate positive non-gap profitability for six quarters in a row gives us confidence in the long-term efficiencies that we'll increasingly be able to leverage as we continue to grow the business. Turning to our metrics for the third quarter, our performance again illustrates the success of our CEM strategy with large new customer wins, multi-product expansions, and triple digit ASPs. We added 120 net new enterprise customers in the third quarter, raising our total enterprise customer count to 6,010. 15 customers either selected or expanded to our CEM platform, bringing the total number of CEM customers to 173. a 57% increase in the number of CEM customers from one year ago. As in the second quarter, our momentum with large transactions continued in Q3 with quarterly ASPs that moderated slightly from our record second quarter and resulted in trailing 12-month ASPs that were again above 100,000, an increase of more than 40% from a year ago. Contributing to this ASP growth were 45 deals worth more than $100,000 per year, and another record for the number of deals valued at more than $500,000 per year. From a product mix perspective, 63% of new and growth sales over the last four quarters came from new products, as we continue to see demand for our newer applications. Our international business also continued to post strong growth results in Q3, with a record 32% of total revenue coming from outside the U.S. compared to 27% one year ago as we expand our presence in every major region of the world. Our revenue mix by vertical was relatively consistent with past quarters at 67% from corporate, 24% from local, state, and countrywide government, and 9% from healthcare, reflecting strong growth in the corporate market with increasingly post-vaccine use cases. As always, we remind you that quarterly metrics can fluctuate, but that the longer-term trends continue to reflect our overall business growth. These outstanding metrics demonstrate the growing market acceptance of our overall CEM strategy, as well as our ability to close larger transactions from our pipeline as organizations increasingly embrace CEM to address numerous high ROI or return on investment use cases. Other operational highlights from Q3 include our progress with our partner channel, which continues to be a valuable driver of business activity. Just a few weeks ago, Deloitte's Cybersecurity Center for the EMEA regions became our latest partner. Everbridge CEM solutions will now be offered as part of Deloitte's EMEA Cybersphere Center's cloud-based detect and respond services for government and commercial customers. to enhance the protection and continuity of digital and physical operations. During our last call, we introduced the CEM certification program with Discover, Goldman Sachs, NBC Universal, Dow, and Alexion, among the first Fortune 500 leaders earning the prestigious Best in Enterprise Resilience designation. Since our last call, financial services leaders Finastra and Comerica Bank pharmaceutical leader Takeda, and international advertising firm Dentsu have joined those organizations ranked as best in enterprise resilience, with some leveraging this certification to distinguish and promote their own brands. We recently extended our international CEM certification momentum with global industry leader Siemens, representing another of the latest organizations outside North America to earn this prestigious designation. Turning to continued innovation, last quarter I mentioned that organizations are finding that our travel risk management solutions, including safety connection, are perfectly suited for work from wherever you are and hybrid work location policies. As employees begin returning to business travel, we see this interest accelerating. With ISO's recent publication of Standard 3130, enterprises are looking to adopt its guidelines on how to manage risks for organizations and their travelers, including threat detection, risk assessment, and prevention and mitigation strategies. Everbridge remains very well positioned from increased interest and attention to travel-related risk. In fact, just as organizations are improving their formulation of playbooks for managing traveler and remote work risk, we are accelerating the execution of our strategic product roadmap to bring additional travel risk management capabilities in-house. building on our 20 years of critical event management and risk intelligence leadership. In order to accelerate our success, we completed a tuck-in acquisition of partner Anvil Group a few days ago. The combination of Anvil's Riskmatics platform with CEM will provide medical, security, and travel assistance and advice to those in need and help keep people safe wherever they go. This strategic acquisition further extends our position as the leader in critical event management and risk intelligence, which is especially timely with today's evolving travel and remote work location trends. In summary, we continued our momentum in the third quarter with results that were above our guidance ranges. As our business scales, we keep driving incremental margin improvements, and we're excited that we've continued to generate strong top-line growth while also increasing profitability. We look forward to closing out a record year as we leverage our leadership position in the market to keep penetrating the multi-billion dollar opportunity we are pursuing. Now, I'll turn the call over to Patrick for more details on our third quarter financial performance and our guidance for Q4 and full year 2021. Patrick?