Market Overview

Everbridge Announces Third Quarter 2017 Financial Results

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Third Quarter 2017 Revenue Increased 37% Year-over-Year

Everbridge,
Inc. (NASDAQ:EVBG), a global software company that provides critical
event management and enterprise safety applications to help keep people
safe and businesses running faster, today announced its financial
results for the third quarter ended September 30, 2017.

"Our strong performance in the third quarter produced revenue and
adjusted EBITDA that both exceeded the high end of our guidance ranges,"
said Jaime Ellertson, Chief Executive Officer and Chairman of
Everbridge. "Our third quarter was characterized by an increasing number
of large and multi-product deals, with more than 10 six-figure or larger
deals, including subscriptions for our new Critical Event Management
platform. While this growth in deal size helped to drive a 32% increase
in average sales price from a year ago, we also expanded our customer
base by a healthy 119 net new customers in the third quarter. With
growing demand for our critical event management and enterprise safety
solutions, we continue to strengthen our position in the marketplace and
remain confident in our ability to continue scaling our business as we
penetrate the large market opportunity ahead of us."

Third Quarter 2017 Financial Highlights

  • Total revenue was $27.3 million, an increase of 37% compared to $19.9
    million for the third quarter of 2016.
  • GAAP operating loss was $(4.4) million, compared to a GAAP operating
    loss of $(2.4) million for the third quarter of 2016.
  • Non-GAAP operating loss was $(0.7) million, an improvement from $(0.9)
    million for the third quarter of 2016. Non-GAAP operating loss
    excludes stock-based compensation and amortization of intangible
    assets related to acquisitions.
  • GAAP net loss was $(4.2) million, compared to $(2.6) million for the
    third quarter of 2016. GAAP net loss per share was $(0.15), based on
    28.1 million basic and diluted weighted average common shares
    outstanding, compared to $(0.18) for the third quarter of 2016, based
    on 14.8 million basic and diluted weighted average common shares
    outstanding.
  • Non-GAAP net loss was $(0.6) million, an improvement from $(1.1)
    million for the third quarter of 2016. Non-GAAP net loss per share was
    $(0.02), based on 28.1 million basic and diluted weighted average
    common shares outstanding, compared to $(0.07) for the third quarter
    of 2016, based on 14.8 million basic and diluted weighted average
    common shares outstanding. Non-GAAP net loss excludes stock-based
    compensation and amortization of intangible assets related to
    acquisitions.
  • Adjusted EBITDA was $0.8 million, an increase from $0.3 million for
    the third quarter of 2016. Adjusted EBITDA represents net loss or
    income before interest income and interest expense, income tax expense
    and benefit, depreciation and amortization expense and stock-based
    compensation expense.
  • Cash flow from operations was $6.7 million, compared to $8.2 million
    for the third quarter of 2016.
  • Free cash flow was $4.4 million, compared to $6.6 million for the
    third quarter of 2016. Free cash flow is cash flow from operations,
    less cash used for capital expenditures and additions to capitalized
    software development costs.

Recent Business Highlights

  • Ended the quarter with 3,560 global customers, up from 3,076 at the
    end of the third quarter of 2016.
  • Selected by the State of New York Office of Information Technology
    Services as its new mass notification service provider for its
    state-wide NY-ALERT program.
  • Launched Visual Command Center Version 6 to help organizations
    holistically envision and manage operating risks.

Business Outlook

Based on information available as of today, Everbridge is issuing
guidance for the fourth quarter and full year 2017 as indicated below.

       
     

Fourth Quarter 2017

   

Full Year 2017

Total Revenue

$28.4     to     $28.6 $103.5     to     $103.7

GAAP net income/(loss)

$(5.4) $(5.1) $(19.3) $(19.0)

GAAP net income/(loss) per share

$(0.19) $(0.18) $(0.69) $(0.68)

Non-GAAP net income/(loss)

$(0.7) $(0.4) $(6.8) $(6.5)

Non-GAAP net income/(loss) per share

$(0.02) $(0.01) $(0.24) $(0.23)

Basic and diluted weighted average shares outstanding

28.2 28.2 27.9 27.9

Adjusted EBITDA

$0.9 $1.2 $(0.8) $(0.5)
 

(All figures in millions, except per share)

Conference Call Information

   
What:

Everbridge Third Quarter 2017 Financial Results Conference Call

When:

Monday, November 6, 2017

Time: 4:30 p.m. ET
Live Call: (844) 413-0949, domestic
(216) 562-0459, international
Replay: (855) 859-2056, passcode 55241084, domestic
(404) 537-3406, passcode 55241084, international

Webcast (live & replay):

https://ir.everbridge.com

 

About Everbridge, Inc.

Everbridge,
Inc. (NASDAQ:EVBG) is the global leader in critical event management
and enterprise safety applications that automate and accelerate an
organization's operational response to critical events in order to keep
people safe and businesses running faster. During public safety threats
such as active shooter situations, terrorist attacks or severe weather
conditions, as well as critical business events such as IT outages or
cyber-attack incidents, over 3,500 global customers rely on the
company's SaaS-based platform to quickly and reliably aggregate and
assess threat data, locate people at risk and responders able to assist,
automate the execution of pre-defined communications processes, and
track progress on executing response plans. The company's platform sent
over 1.5 billion messages in 2016, and offers the ability to reach over
200 countries and territories with secure delivery to more than 100
different communication devices. The company's critical event management
and enterprise safety applications include Mass Notification, Incident
Management, IT Alerting, Safety Connection™, Community Engagement®,
Visual Command Center®, Crisis Commander® and
CareConverge™, and are easy-to-use and deploy, secure, highly scalable
and reliable. Everbridge serves 8 of the 10 largest U.S. cities, 8 of
the 10 largest U.S.-based investment banks, all four of the largest
global accounting firms, all 25 of the 25 busiest North American
airports and 6 of the 10 largest global automakers. Everbridge is based
in Boston and Los Angeles with additional offices in San Francisco,
Lansing, Beijing, London and Stockholm. For more information, visit www.everbridge.com,
read the company blog,
and follow on Twitter
and Facebook.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures:
non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin,
non-GAAP sales and marketing, non-GAAP research and development,
non-GAAP general and administrative, non-GAAP operating expenses,
non-GAAP operating income/(loss), non-GAAP net income/(loss), non-GAAP
net income/(loss) per share, adjusted EBITDA, and free cash flow.

We believe that these non-GAAP measures of financial results provide
useful information to management and investors regarding certain
financial and business trends relating to Everbridge's financial
condition and results of operations. We use these non-GAAP measures for
financial, operational and budgetary decision-making purposes, to
understand and evaluate our core operating performance and trends, and
to generate future operating plans. We believe that these non-GAAP
financial measures provide useful information regarding past financial
performance and future prospects, and permit us to more thoroughly
analyze key financial metrics used to make operational decisions. We
believe that the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating ongoing operating
results and trends and in comparing our financial measures with other
software companies, many of which present similar non-GAAP financial
measures to investors.

We do not consider these non-GAAP measures in isolation or as an
alternative to financial measures determined in accordance with GAAP.
The principal limitation of these non-GAAP financial measures is that
they exclude significant expenses and income that are required by GAAP
to be recorded in the Company's financial statements. In addition, they
are subject to inherent limitations as they reflect the exercise of
judgment by management about which expenses and income are excluded or
included in determining these non-GAAP financial measures. In order to
compensate for these limitations, management presents non-GAAP financial
measures in connection with GAAP results. We urge investors to review
the reconciliation of our non-GAAP financial measures to the comparable
GAAP financial measures, which are included in this press release, and
not to rely on any single financial measure to evaluate our business.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including but not limited to, statements
regarding the anticipated opportunity and trends for growth in our
critical communications and enterprise safety applications and our
overall business, our market opportunity, our expectations regarding
sales of our products, our goal to maintain market leadership and extend
the markets in which we compete for customers, and our expected
financial results for the fourth quarter of 2017 and the full fiscal
year 2017. These forward-looking statements are made as of the date of
this press release and were based on current expectations, estimates,
forecasts and projections as well as the beliefs and assumptions of
management. Words such as "expect," "anticipate," "should," "believe,"
"target," "project," "goals," "estimate," "potential," "predict," "may,"
"will," "could," "intend," variations of these terms or the negative of
these terms and similar expressions are intended to identify these
forward-looking statements. Forward-looking statements are subject to a
number of risks and uncertainties, many of which involve factors or
circumstances that are beyond our control. Our actual results could
differ materially from those stated or implied in forward-looking
statements due to a number of factors, including but not limited to: our
ability to attract new customers and retain and increase sales to
existing customers; our ability to increase sales of our Mass
Notification application and/or ability to increase sales of our other
applications; our ability to successfully integrate businesses and
assets that we have acquired or may acquire in the future; developments
in the markets for critical event management and targeted and
contextually relevant critical communications or the associated
regulatory environment; our estimates of market opportunity and
forecasts of market growth may prove to be inaccurate; we have not been
profitable on a consistent basis historically and may not achieve or
maintain profitability in the future; the lengthy and unpredictable
sales cycles for new customers; nature of our business exposes us to
inherent liability risks; our ability to maintain successful
relationships with our channel partners and technology partners; our
ability to manage our growth effectively; our ability to respond to
competitive pressures; potential liability related to privacy and
security of personally identifiable information; our ability to protect
our intellectual property rights, and the other risks detailed in our
risk factors discussed in filings with the U.S. Securities and Exchange
Commission ("SEC"), including but not limited to our Annual Report on
Form 10-K for the year ended December 31, 2016 filed with the SEC on
March 23, 2017. The forward-looking statements included in this press
release represent our views as of the date of this press release. We
undertake no intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. These forward-looking statements should not
be relied upon as representing our views as of any date subsequent to
the date of this press release.

All Everbridge products are trademarks of Everbridge, Inc. in the USA
and other countries. All other product or company names mentioned are
the property of their respective owners.

         
Consolidated Balance Sheets
(in thousands)
(unaudited)

September
30, 2017

December
31, 2016

   
 
Current assets:
Cash and cash equivalents $ 23,628 $ 60,765
Restricted cash 297 -
Short-term investments 24,029 -
Accounts receivable, net 22,273 17,812
Prepaid expenses 3,564 1,770
Other current assets   2,780         2,536  
Total current assets 76,571 82,883
Property and equipment, net 2,844 2,923
Capitalized software development costs, net 9,672 8,792
Goodwill 31,343 9,676
Intangible assets, net 9,499 3,940
Other assets   190         108  
Total assets $ 130,119       $ 108,322  
 
Current liabilities:
Accounts payable $ 3,223 $ 2,434
Accrued payroll and employee related liabilities 9,778 7,456
Accrued expenses 2,003 1,957
Deferred revenue 63,040 51,388
Contingent liabilities 1,705 -
Other current liabilities   614         548  
Total current liabilities 80,363 63,783
Long-term liabilities:
Deferred revenue, noncurrent 1,455 1,246
Deferred tax liabilities 594 494
Other long term liabilities   533         447  
Total liabilities $ 82,945       $ 65,970  
 
Stockholders' equity:
Common stock 28 27
Additional paid-in capital 150,614 132,246
Accumulated deficit (103,488 ) (89,618 )
Accumulated other comprehensive income (loss)   20         (303 )
Total stockholders' equity   47,174         42,352  
Total liabilities and stockholders' equity $ 130,119       $ 108,322  
                 
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2017     2016 2017     2016
 
Revenue $ 27,312 $ 19,932 $ 75,177 $ 55,566
Cost of revenue   8,076         6,173     22,969         17,324  
Gross profit 19,236 13,759 52,208 38,242
70.43 % 69.03 % 69.45 % 68.82 %
Operating expenses:
Sales and marketing 11,626 8,605 33,589 25,659
Research and development 5,626 3,917 16,082 10,560
General and administrative   6,375         3,666     16,640         10,252  
Total operating expenses   23,627         16,188     66,311         46,471  
Operating loss   (4,391 )       (2,429 )   (14,103 )       (8,229 )
 
Other income (expense):
Interest and investment income 106 - 234 -
Interest expense (2 ) (195 ) (5 ) (506 )
Other income (expense), net   (23 )       30     (61 )       2  
Total other income (expense), net   81         (165 )   168         (504 )
Loss before income taxes (4,310 ) (2,594 ) (13,935 ) (8,733 )
Income taxes, net   79         (35 )   65         75  
Net loss $ (4,231 )     $ (2,629 ) $ (13,870 )     $ (8,658 )
 
Net loss per share attributable to common stockholders:
Basic $ (0.15 ) $ (0.18 ) $ (0.50 ) $ (0.66 )
Diluted $ (0.15 ) $ (0.18 ) $ (0.50 ) $ (0.66 )
 
Weighted-average common shares outstanding:
Basic 28,100,172 14,772,006 27,719,519 13,124,480
Diluted 28,100,172 14,772,006 27,719,519 13,124,480
 
Other comprehensive income (loss):
Foreign currency translation adjustment, net 197 66 323 (300 )
of tax                
Total comprehensive loss $ (4,034 )     $ (2,563 ) $ (13,547 )     $ (8,958 )
 
 
Stock-based compensation expense included in the above:
(in thousands)
Three months ended Nine months ended
September 30, September 30,
2017     2016 2017     2016
 
Cost of revenue $ 141 $ 46 $ 266 $ 135
Sales and marketing 691 211 1,250 503
Research and development 416 87 738 263
General and administrative   1,555         415     2,618         1,264  
Total stock-based compensation $ 2,803 $ 759 $ 4,872 $ 2,165
                 
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2017     2016 2017     2016
Cash flows from operating activities:
Net loss $ (4,231 ) $ (2,629 ) $ (13,870 ) $ (8,658 )
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 2,418 1,974 7,646 5,675
Loss on disposal of assets 15 - 15 74
Non-cash investment income (66 ) - (74 ) -
Deferred income taxes 21 - 62 (224 )
Non-cash interest expense on line of credit and term loan - 57 - 67
Provision for doubtful accounts and sales return reserve 219 8 588 95
Stock-based compensation 2,794 749 4,838 2,127
Increase (decrease) in operating assets and liabilities:
Accounts receivable, net (618 ) 1,210 (3,591 ) (391 )
Prepaid expenses (508 ) (432 ) (1,552 ) (1,188 )
Other assets (1,009 ) (529 ) (980 ) (1,743 )
Accounts payable 1,250 317 820 251
Accrued payroll and employee related liabilities 1,763 1,295 2,263 1,558
Accrued expenses (347 ) 678 (54 ) 305
Deferred revenue 4,933 5,552 7,801 8,605
Other liabilities   104         (24 )   467         (18 )

Net cash provided by operating activities

  6,738         8,226     4,379         6,535  
 
Cash flows from investing activities:
Capital expenditures (832 ) (393 ) (1,337 ) (739 )
Proceeds from sale of leaseback transaction 399 - 794 -
Payments for acquisition of business, net of acquired cash - - (21,235 ) -
Additions to capitalized software development costs (1,542 ) (1,254 ) (4,586 ) (4,294 )
Change in restricted cash - - (294 ) -
Purchase of short-term investments (17,528 ) - (29,955 ) -
Maturities of short-term investments   6,000         -     6,000         -  
Net cash used in investing activities   (13,503 )       (1,647 )   (50,613 )       (5,033 )
 
Cash flows from financing activities:
Proceeds from line of credit - - - 9,500
Payments on line of credit - (10,500 ) - (19,500 )
Principal payments on capital leases - - - (58 )
Payments of issuance costs relating to the line of credit and term
loan
- (19 ) (19 )
Proceeds from public offering, net - 69,750 10,444 69,750
Payments of public offering costs (143 ) (271 ) (872 ) (1,372 )
Payments of debt issuance costs (40 ) - (40 ) -
Proceeds from (payments on) term loan (5,000 ) (5,000 )
Payment on note payable - - - (2,018 )
Payments on contingent consideration (3,750 ) - (3,750 ) -
Proceeds from employee stock purchase plan 686 - 1,540 -
Proceeds from option exercises 972 563 2,087 748
Proceeds from exercise of warrants   -         25     -         25  
Net cash provided by (used in) financing activities   (2,275 )       54,548     9,409         52,056  
 
Effect of exchange rates on cash and cash equivalents   (165 )       121     (312 )       160  
Net increase (decrease) in cash and cash equivalents (9,205 ) 61,248 (37,137 ) 53,718
 
Cash and cash equivalents, beginning of period   32,833         1,048     60,765         8,578  
Cash and cash equivalents, end of period $ 23,628       $ 62,296   $ 23,628       $ 62,296  
                 
Reconciliation of GAAP measures to non-GAAP measures
(in thousands, except share and per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2017     2016 2017     2016
 
Cost of revenue $ 8,076 $ 6,173 $ 22,969 $ 17,324
Amortization of acquired intangibles (293 ) (566 ) (1,325 ) (1,751 )
Stock-based compensation   (141 )       (46 )   (266 )       (135 )
Non-GAAP cost of revenue 7,642 5,561 21,378 15,438
 
Gross profit 19,236 13,759 52,208 38,242
Amortization of acquired intangibles 293 566 1,325 1,751
Stock-based compensation   141         46     266         135  
Non-GAAP gross profit 19,670 14,371 53,799 40,128
Non-GAAP gross margin 72.02 % 72.10 % 71.56 % 72.22 %
 
Sales and marketing 11,626 8,605 33,589 25,659
Stock-based compensation   (691 )       (211 )   (1,250 )       (503 )
Non-GAAP sales and marketing 10,935 8,394 32,339 25,156
 
Research and development 5,626 3,917 16,082 10,560
Stock-based compensation   (416 )       (87 )   (738 )       (263 )
Non-GAAP research and development 5,210 3,830 15,344 10,297
 
General and administrative 6,375 3,666 16,640 10,252
Amortization of acquired intangibles (560 ) (224 ) (1,562 ) (701 )
Stock-based compensation   (1,555 )       (415 )   (2,618 )       (1,264 )
Non-GAAP general and administrative 4,260 3,027 12,460 8,287
 
Total operating expenses 23,627 16,188 66,311 46,471
Amortization of acquired intangibles (560 ) (224 ) (1,562 ) (701 )
Stock-based compensation   (2,662 )       (713 )   (4,606 )       (2,030 )
Non-GAAP operating expenses $ 20,405 $ 15,251 $ 60,143 $ 43,740
 
Operating loss $ (4,391 ) $ (2,429 ) $ (14,103 ) $ (8,229 )
Amortization of acquired intangibles 853 790 2,887 2,452
Stock-based compensation   2,803         759     4,872         2,165  
Non-GAAP operating loss $ (735 ) $ (880 ) $ (6,344 ) $ (3,612 )
 
Net loss $ (4,231 ) $ (2,629 ) $ (13,870 ) $ (8,658 )
Amortization of acquired intangibles 853 790 2,887 2,452
Stock-based compensation   2,803         759     4,872         2,165  
Non-GAAP net loss $ (575 ) $ (1,080 ) $ (6,111 ) $ (4,041 )
 
Weighted average common shares outstanding, basic and diluted 28,100,172 14,772,006 27,719,519 13,124,480
 
Non-GAAP net loss per share $ (0.02 ) $ (0.07 ) $ (0.22 ) $ (0.31 )
 
Net loss $ (4,231 ) $ (2,629 ) $ (13,870 ) $ (8,658 )
Interest (income) expense, net (104 ) 195 (229 ) 506
Income taxes, net (79 ) 35 (65 ) (75 )
Depreciation and amortization   2,418         1,974     7,646         5,675  
EBITDA (1,996 ) (425 ) (6,518 ) (2,552 )
Stock-based compensation   2,803         759     4,872         2,165  
Adjusted EBITDA $ 807 $ 334 $ (1,646 ) $ (387 )
 
Net cash provided by operating activities $ 6,738 $ 8,226 $ 4,379 $ 6,535
Capital expenditures (832 ) (393 ) (1,337 ) (739 )
Additions to capitalized software development costs   (1,542 )       (1,254 )   (4,586 )       (4,294 )
Free cash flow $ 4,364 $ 6,579 $ (1,544 ) $ 1,502
                 
(Continued) Reconciliation of GAAP measures to non-GAAP measures
(in millions, except share and per share data)
(unaudited)
Business outlook: Three months ended Year ended
December 31, 2017 December 31, 2017
Low end     High end Low end     High end
 
Net loss $ (5.4 ) $ (5.1 ) $ (19.3 ) $ (19.0 )
Amortization of acquired intangibles 0.9 0.9 3.8 3.8
Stock-based compensation   3.8         3.8     8.7         8.7  
Non-GAAP net loss $ (0.7 ) $ (0.4 ) $ (6.8 ) $ (6.5 )
 
Weighted average common shares outstanding, basic and diluted 28,200,000 28,200,000 27,900,000 27,900,000
 
Net loss per share $ (0.19 ) $ (0.18 ) $ (0.69 ) $ (0.68 )
Non-GAAP net loss per share $ (0.02 ) $ (0.01 ) $ (0.24 ) $ (0.23 )
 
Net loss $ (5.4 ) $ (5.1 ) $ (19.3 ) $ (19.0 )
Interest income (expense), net (0.1 ) (0.1 ) (0.3 ) (0.3 )
Benefit from income taxes - - (0.1 ) (0.1 )
Depreciation and amortization   2.6         2.6     10.2         10.2  
EBITDA (2.9 ) (2.6 ) (9.5 ) (9.2 )
Stock-based compensation   3.8         3.8     8.7         8.7  
Adjusted EBITDA $ 0.9 $ 1.2 $ (0.8 ) $ (0.5 )

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