Everbridge's Accelerating Sales Productivity And Impressive Future Growth: Analyst Outlook

Needham analyst Scott Berg upgraded Everbridge, Inc. EVBG to Buy from Hold, with a price target of $35.

The analyst notes that Everbridge's sales productivity is rapidly improving, setting up a more predictable future growth outlook benefiting from CEM multi-product sales.

Berg sees the normalized growth rate coming in higher than expectations, with a return to double-digit growth as early as 2024 and strong profitability improvements pushing the stock price higher. 

The company's upcoming free cash flow, or FCF generation, is one of the most impressive in the niche space, notes the analyst, with margins quickly jumping above 15%. 

The company looks to generate ~$60 million of FCF in FY23, up rapidly from $1.6 million in FY22. 

The company will deliver $80 million- $100 million in annual FCF generation in FY24 and beyond.

Management's FY27 targets imply ~25% non-GAAP operating margins or 30% adj. EBITDA margins, assuming revenue growth pushes up to 12% in FY27. 

Overall, Berg thinks growth and margin expansion should accelerate for Everbridge, resulting in "significant outperformance" going ahead.

For the second quarter, the analyst expects total revenues to grow 7.1% Y/Y to $110.30 million, with Non-GAAP EPS of $0.27.

For FY23, Berg sees total revenues to jump 6.3% Y/Y to $459.12 million, while for FY24, the total revenues are expected to increase by 8.9% Y/Y to $500.06 million.

The analyst models 8.9%/23.2% revenue growth/adj EBITDA margins in FY24 versus consensus estimates of 7.4%/21.9%.

Price Action: EVBG shares are trading higher by 5.90% to $28.74 on the last check Tuesday.