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Everbridge Announces Second Quarter 2018 Financial Results
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Second Quarter Revenue Increased 43% Year-over-Year

BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 6, 2018-- Everbridge, Inc. (NASDAQ: EVBG), the global leader in critical event management and enterprise safety software applications to help keep people safe and businesses running, today announced its financial results for the second quarter ended June 30, 2018.

“Our strong second quarter results exceeded our guidance ranges for both revenue and non-GAAP profitability,” said Jaime Ellertson, Chief Executive Officer and Chairman of Everbridge. “Our performance was driven by the increasing global demand for Everbridge Mass Notification, further growth in the number and size of multi-product deals at new and existing customers, and on-going upgrades and adoption of our Critical Event Management platform. During the quarter we also saw our core international business continue to accelerate, which was further bolstered by our recent UMS acquisition.”

Ellertson continued, “Our strong Q2 performance across all of our key growth drivers gives us the confidence to raise our revenue expectations for the full year. Additionally, the combination of our accelerating international performance plus our expansion in the federal market enabled by our recent FedRAMP authorization will support our continued success as a leader in our large multi-billion-dollar Critical Event Management market.”

Second Quarter 2018 Financial Highlights

  • Total revenue was $35.8 million, an increase of 43% compared to $25.0 million for the second quarter of 2017.
  • GAAP operating loss was $(15.6) million, compared to a GAAP operating loss of $(3.5) million for the second quarter of 2017.
  • Non-GAAP operating loss was $(3.7) million, compared to non-GAAP operating loss of $(1.6) million for the second quarter of 2017. Non-GAAP operating loss excludes stock-based compensation and amortization of intangible assets related to acquisitions.
  • GAAP net loss was $(16.9) million, compared to $(3.4) million for the second quarter of 2017. GAAP net loss per share was $(0.59), based on 28.8 million basic and diluted weighted average common shares outstanding, compared to $(0.12) for the second quarter of 2017, based on 27.9 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net loss was $(5.1) million, compared to $(1.5) million in the second quarter of 2017. Non-GAAP net loss per share was $(0.18), based on 28.8 million basic and diluted weighted average common shares outstanding, compared to $(0.05) for the second quarter of 2017, based on 27.9 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 a loss of $(1.8) million, compared to a loss of $(0.1) million in the second quarter of 2017. Adjusted EBITDA represents net loss 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 an outflow of $(9.0) million compared to an outflow of $(3.8) million for the second quarter of 2017.
  • Free cash flow was an outflow of $(11.2) million compared to an outflow of $(5.7) million for the second quarter of 2017. 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 4,158 global enterprise customers, up from 3,201 at the end of the second quarter of 2017.
  • Expanded the capabilities of the national alerting system for the country of Sweden, allowing all mobile operators in Sweden to send location-based SMS alerts to the entire population.
  • Received final FedRAMP authorization following a multi-year effort, broadening the addressable government market and reinforcing the security and scale of the Everbridge platform for other markets.
  • Appointed Alison Dean, currently executive vice president, chief financial officer and treasurer at iRobot, to the Everbridge Board of Directors.
  • Announced that long-time Chairman and CEO Jaime Ellertson will transition from CEO to Executive Chairman in mid to late 2019.

Business Outlook

Based on information available as of today, Everbridge is issuing guidance for the third quarter and full year 2018 as indicated below.

             
     

Third Quarter 2018

    

Full Year 2018

Total Revenue

     $37.9   to   $38.2     $143.7   to   $144.3

GAAP net income/(loss)

     $(9.7)       $(9.2)     $(51.4)       $(50.7)

GAAP net income/(loss) per share

     $(0.33)       $(0.31)     $(1.75)       $(1.73)

Non-GAAP net income/(loss)

     $(3.7)       $(3.4)     $(17.0)       $(16.3)

Non-GAAP net income/(loss) per share

     $(0.13)       $(0.12)     $(0.58)       $(0.56)

Basic and diluted weighted average shares outstanding

     29.4       29.4     29.3       29.3

Adjusted EBITDA

     $(0.2)       $0.1     $(3.4)       $(2.8)
                             

(All figures in millions, except per share data)

 

Conference Call Information
 
What:       Everbridge Second Quarter 2018 Financial Results Conference Call
When:       Monday, August 6, 2018
Time:       4:30 p.m. ET
Live Call:       (866) 439-5043, domestic
        (409) 220-9843, international
Replay:       (855) 859-2056, passcode 3275238, domestic
        (404) 537-3406, passcode 3275238, international
Webcast (live & replay):      

http://ir.everbridge.com
         

About Everbridge, Inc.

Everbridge, Inc. (NASDAQ: EVBG) is a global software company that provides enterprise software applications that automate and accelerate organizations’ operational response to critical events in order to keep people safe and businesses running. 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, cyber-attacks or other incidents such as product recalls or supply-chain interruptions, over 4,100 global customers rely on the company’s Critical Event Management 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 through the secure delivery to over 100 different communication devices, and track progress on executing response plans. The company’s platform sent over 2 billion messages in 2017, and offers the ability to reach 500 million people in more than 200 countries and territories including the entire mobile populations on a country-wide scale in Sweden, the Netherlands, the Bahamas, Singapore, Greece, Cambodia, and a number of the largest states in India. The company’s critical communications and enterprise safety applications include Mass Notification, Incident Management, Safety Connection™, IT Alerting, Visual Command Center®, Crisis Commander®, Community Engagement™ and Secure Messaging. Everbridge serves 9 of the 10 largest U.S. cities, 8 of the 10 largest U.S.-based investment banks, all 25 of the 25 busiest North American airports, six of the 10 largest global consulting firms, six of the 10 largest global automakers, all four of the largest global accounting firms, four of the 10 largest U.S.-based health care providers and four of the 10 largest U.S.-based health insurers. Everbridge is based in Boston and Los Angeles with additional offices in Lansing, San Francisco, Beijing, Kolkata, London, Oslo 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 second quarter of 2018 and the full fiscal year 2018. 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: the ability of our products and services to perform as intended and meet our customers’ expectations; 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; developments in the market for 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 attract, integrate and retain qualified personnel; our ability to successfully integrate businesses and assets that we have acquired or may acquire in the future; 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, 2017 filed with the SEC on March 12, 2018. 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)            
      June 30, 2018     December 31, 2017
             
Current assets:            
Cash and cash equivalents     $ 102,599       $ 103,051  
Short-term investments       3,423         42,908  
Accounts receivable, net       33,064         31,699  
Prepaid expenses       4,949         2,563  
Deferred costs       5,419         2,429  
Other current assets       2,858         811  
Total current assets       152,312         183,461  
Property and equipment, net       2,722         2,796  
Capitalized software development costs, net       11,487         10,005  
Goodwill       53,048         31,328  
Intangible assets, net       23,842         8,634  
Deferred costs       7,792         -  
Other assets       242         189  
Total assets     $ 251,445       $ 236,413  
             
Current liabilities:            
Accounts payable     $ 4,154       $ 2,446  
Accrued payroll and employee related liabilities       12,727         11,111  
Accrued expenses       4,277         1,825  
Deferred revenue       79,417         70,090  
Notes payable       440         -  
Contingent consideration liabilities       -         682  
Other current liabilities       791         808  
Total current liabilities       101,806         86,962  
Long-term liabilities:            
Deferred revenue, noncurrent       3,046         2,982  
Convertible senior notes       91,755         89,481  
Deferred tax liabilities       922         482  
Other long term liabilities       1,079         515  
Total liabilities     $ 198,608       $ 180,422  
             
Stockholders' equity:            
Common stock       29         28  
Additional paid-in capital       184,654         164,995  
Accumulated deficit       (129,415 )       (109,252 )
Accumulated other comprehensive income (loss)       (2,431 )       220  
Total stockholders' equity       52,837         55,991  
Total liabilities and stockholders' equity     $ 251,445       $ 236,413  
                     
                         
Consolidated Statements of Comprehensive Loss                        
(in thousands, except share and per share data)                        
(unaudited)                        
      Three months ended     Six months ended
      June 30,     June 30,
      2018     2017     2018     2017
                         
Revenue     $ 35,822       $ 25,021       $ 66,341       $ 47,865  
Cost of revenue       11,532         7,239         21,192         14,893  
Gross profit       24,290         17,782         45,149         32,972  
        67.81 %       71.07 %       68.06 %       68.89 %
Operating expenses:                        
Sales and marketing       19,179         11,057         34,955         21,963  
Research and development       12,027         5,179         20,198         10,456  
General and administrative       8,635         5,065         16,479         10,265  
Total operating expenses       39,841         21,301         71,632         42,684  
Operating loss       (15,551 )       (3,519 )       (26,483 )       (9,712 )
                         
Other income (expense):                        
Interest and investment income       400         77         856         128  
Interest expense       (1,572 )       (2 )       (3,144 )       (3 )
Other income (expense), net       (6 )       (6 )       (204 )       (38 )
Total other income (expense), net       (1,178 )       69         (2,492 )       87  
Loss before income taxes       (16,729 )       (3,450 )       (28,975 )       (9,625 )
Income taxes, net       (189 )       13         (285 )       (14 )
Net loss     $ (16,918 )     $ (3,437 )     $ (29,260 )     $ (9,639 )
                         
Net loss per share attributable to common stockholders:                        
Basic     $ (0.59 )     $ (0.12 )     $ (1.02 )     $ (0.35 )
Diluted     $ (0.59 )     $ (0.12 )     $ (1.02 )     $ (0.35 )
                         
Weighted-average common shares outstanding:                        
Basic       28,848,809         27,877,346         28,642,887         27,526,038  
Diluted       28,848,809         27,877,346         28,642,887         27,526,038  
                         
Other comprehensive income (loss):                        
Foreign currency translation adjustment, net       (2,384 )       85         (2,651 )       126  
of taxes                        
Total comprehensive loss     $ (19,302 )     $ (3,352 )     $ (31,911 )     $ (9,513 )
                         
                         
Stock-based compensation expense included in the above:                        
(in thousands)                        
      Three months ended     Six months ended
      June 30,     June 30,
      2018     2017     2018     2017
                         
Cost of revenue     $ 940       $ 60       $ 1,565       $ 125  
Sales and marketing       3,532         282         5,967         559  
Research and development       3,205         176         4,515         322  
General and administrative       2,345         583         4,669         1,063  
Total stock-based compensation     $ 10,022       $ 1,101       $ 16,716       $ 2,069  
                         
                         
Consolidated Statements of Cash Flows                        
(in thousands)                        
(unaudited)                        
      Three months ended     Six months ended
      June 30,     June 30,
      2018     2017     2018     2017
Cash flows from operating activities:                        
Net loss     $ (16,918 )     $ (3,437 )     $ (29,260 )     $ (9,639 )
Adjustments to reconcile net loss to net cash provided by operating activities:                        
Depreciation and amortization       3,690         2,295         6,328         5,228  
Amortization of deferred costs       1,280         1,387         2,513         2,808  
Loss on disposal of assets       -         -         84         -  
Deferred income taxes       67         41         101         41  
Accretion of interest on convertible senior notes       1,140         -         2,274         -  
Non-cash investment income       (69 )       (8 )       (228 )       (8 )
Provision for doubtful accounts       216         209         24         369  
Change in fair value of contingent consideration       (250 )       -         (250 )       -  
Stock-based compensation       9,926         1,089         16,512         2,044  
Increase (decrease) in operating assets and liabilities:                        
Accounts receivable       (3,968 )       (7,170 )       5,627         (2,973 )
Prepaid expenses       (360 )       27         (2,011 )       (1,044 )
Deferred costs       (1,975 )       (3,411 )       (4,198 )       (2,427 )
Other assets       1,013         1,715         (1,005 )       (352 )
Accounts payable       (609 )       (426 )       93         (430 )
Accrued payroll and employee related liabilities       (4,097 )       (388 )       305         500  
Accrued expenses       (818 )       199         566         293  
Deferred revenue       3,133         3,684         1,061         2,868  
Other liabilities       (361 )       376         12         363  
Net cash used in operating activities       (8,960 )       (3,818 )       (1,452 )       (2,359 )
                         
Cash flows from investing activities:                        
Capital expenditures       (161 )       (282 )       (414 )       (505 )
Proceeds from sale of leaseback transaction       -         395         -         395  
Additions to capitalized software development costs       (2,039 )       (1,557 )       (4,038 )       (3,044 )
Additions to intangibles       (32 )       -         (168 )       -  
Payment for acquisition of business, net of acquired cash       (35,549 )       (294 )       (35,857 )       (21,529 )
Purchase of short-term investments       -         (12,427 )       (30,932 )       (12,427 )
Maturities of short-term investments       45,145         -         70,645         -  
Net cash provided by (used in) investing activities       7,364         (14,165 )       (764 )       (37,110 )
                         
Cash flows from financing activities:                        
RSUs withheld to settle employee tax withholding liability       (2,750 )       -         (3,772 )       -  
Payment of contingent consideration       (431 )       -         (431 )       -  
Proceeds from follow on offering, net       -         10,444         -         10,444  
Payments of public offering costs       -         (431 )       -         (729 )
Payments of debt issuance costs       -         -         (84 )       -  
Proceeds from employee stock purchase plan       -         -         881         854  
Proceeds from stock option exercises       4,369         1,103         5,835         1,115  
Net cash provided by financing activities       1,188         11,116         2,429         11,684  
                         
Effect of exchange rates on cash, cash equivalents and restricted cash       (626 )       21         (665 )       (147 )
Net decrease in cash, cash equivalents and restricted cash       (1,034 )       (6,846 )       (452 )       (27,932 )
                         
Cash, cash equivalents and restricted cash, beginning of period       103,633         39,679         103,051         60,765  
Cash, cash equivalents and restricted cash, end of period     $ 102,599       $ 32,833       $ 102,599       $ 32,833  
                         
Reconciliation of GAAP measures to non-GAAP measures                  
(in thousands, except share and per share data)                        
(unaudited)                        
      Three months ended     Six months ended
      June 30,     June 30,
      2018     2017     2018     2017
                         
Cost of revenue     $ 11,532       $ 7,239       $ 21,192       $ 14,893  
Amortization of acquired intangibles       (381 )       (291 )       (633 )       (1,032 )
Stock-based compensation       (940 )       (60 )       (1,565 )       (125 )
Non-GAAP cost of revenue       10,211         6,888         18,994         13,736  
                         
Gross profit       24,290         17,782         45,149         32,972  
Amortization of acquired intangibles       381         291         633         1,032  
Stock-based compensation       940         60         1,565         125  
Non-GAAP gross profit       25,611         18,133         47,347         34,129  
Non-GAAP gross margin       71.50 %       72.47 %       71.37 %       71.30 %
                         
Sales and marketing       19,179         11,057         34,955         21,963  
Stock-based compensation       (3,532 )       (282 )       (5,967 )       (559 )
Non-GAAP sales and marketing       15,647         10,775         28,988         21,404  
                         
Research and development       12,027         5,179         20,198         10,456  
Stock-based compensation       (3,205 )       (176 )       (4,515 )       (322 )
Non-GAAP research and development       8,822         5,003         15,683         10,134  
                         
General and administrative       8,635         5,065         16,479         10,265  
Amortization of acquired intangibles       (1,426 )       (554 )       (1,997 )       (1,002 )
Stock-based compensation       (2,345 )       (583 )       (4,669 )       (1,063 )
Non-GAAP general and administrative       4,864         3,928         9,813         8,200  
                         
Total operating expenses       39,841         21,301         71,632         42,684  
Amortization of acquired intangibles       (1,426 )       (554 )       (1,997 )       (1,002 )
Stock-based compensation       (9,082 )       (1,041 )       (15,151 )       (1,944 )
Non-GAAP operating expenses     $ 29,333       $ 19,706       $ 54,484       $ 39,738  
                         
Operating loss     $ (15,551 )     $ (3,519 )     $ (26,483 )     $ (9,712 )
Amortization of acquired intangibles       1,807         845         2,630         2,034  
Stock-based compensation       10,022         1,101         16,716         2,069  
Non-GAAP operating loss     $ (3,722 )     $ (1,573 )     $ (7,137 )     $ (5,609 )
                         
Net loss     $ (16,918 )     $ (3,437 )     $ (29,260 )     $ (9,639 )
Amortization of acquired intangibles       1,807         845         2,630         2,034  
Stock-based compensation       10,022         1,101         16,716         2,069  
Non-GAAP net loss     $ (5,089 )     $ (1,491 )     $ (9,914 )     $ (5,536 )
                         
Weighted average common shares outstanding, basic and diluted       28,848,809         27,877,346         28,642,887         27,526,038  
                         
Non-GAAP net loss per share     $ (0.18 )     $ (0.05 )     $ (0.35 )     $ (0.20 )
                         
Net loss     $ (16,918 )     $ (3,437 )     $ (29,260 )     $ (9,639 )
Interest and investment (income) expense, net       1,172         (75 )       2,288         (125 )
Income taxes, net       189         (13 )       285         14  
Depreciation and amortization       3,690         2,295         6,328         5,228  
EBITDA       (11,867 )       (1,230 )       (20,359 )       (4,522 )
Stock-based compensation       10,022         1,101         16,716         2,069  
Adjusted EBITDA     $ (1,845 )     $ (129 )     $ (3,643 )     $ (2,453 )
                         
Net cash provided by operating activities     $ (8,960 )     $ (3,818 )     $ (1,452 )     $ (2,359 )
Capital expenditures       (161 )       (282 )       (414 )       (505 )
Additions to capitalized software development costs       (2,039 )       (1,557 )       (4,038 )       (3,044 )
Free cash flow     $ (11,160 )     $ (5,657 )     $ (5,904 )     $ (5,908 )
                         
             
(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
      September 30, 2018     December 31, 2018
      Low end     High end     Low end     High end
                         
Net loss     $ (9.7 )     $ (9.2 )     $ (51.4 )     $ (50.7 )
Amortization of acquired intangibles       1.9         1.9         6.4         6.4  
Stock-based compensation       4.1         3.9         28.0         28.0  

Non-GAAP net loss

     $ (3.7 )     $ (3.4 )     $ (17.0 )     $ (16.3 )
                         
Weighted average common shares outstanding, basic and diluted       29,400,000         29,400,000         29,300,000         29,300,000  
                         
Net loss per share     $ (0.33 )     $ (0.31 )     $ (1.75 )     $ (1.73 )
Non-GAAP net loss per share     $ (0.13 )     $ (0.12 )     $ (0.58 )     $ (0.56 )
                         
Net loss     $ (9.7 )     $ (9.2 )     $ (51.4 )     $ (50.7 )
Interest (income) expense, net       1.3         1.3         5.2         5.1  
Income taxes, net       0.2         0.2         0.7         0.7  
Depreciation and amortization       3.9         3.9         14.1         14.1  
EBITDA       (4.3 )       (3.8 )       (31.4 )       (30.8 )
Stock-based compensation       4.1         3.9         28.0         28.0  
Adjusted EBITDA     $ (0.2 )     $ 0.1       $ (3.4 )     $ (2.8 )
                                         

 

Source: Everbridge, Inc.

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