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evbg-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37874

Everbridge, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		26-2919312
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

25 Corporate Drive, Suite 400 Burlington, Massachusetts		01803
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (818) 230-9700

Securities registered pursuant to Section 12(b) of the Securities Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		EVBG		The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

As of May 4, 2021, the registrant had 37,660,267 shares of common stock issued and outstanding.

EVERBRIDGE, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Comprehensive Loss	5

	Condensed Consolidated Statements of Stockholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to the Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50

Item 4.	Controls and Procedures	51

PART II.	OTHER INFORMATION	52

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	55

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	56

Signatures		57

PART I—FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (Unaudited).

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

	March 31, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	734,752		$	467,171
Restricted cash		4,667			4,667
Accounts receivable, net		84,810			94,376
Prepaid expenses		13,479			11,774
Deferred costs and other current assets		22,004			20,464
Total current assets		859,712			598,452
Property and equipment, net		8,501			7,774
Capitalized software development costs, net		16,787			16,329
Goodwill		234,779			187,411
Intangible assets, net		130,874			113,762
Restricted cash		3,788			3,792
Prepaid expenses		1,574			1,943
Deferred costs and other assets		32,188			31,481
Total assets	$	1,288,203		$	960,944
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,829		$	9,698
Accrued payroll and employee related liabilities		25,606			27,674
Accrued expenses		12,047			7,246
Deferred revenue		178,822			165,389
Contingent consideration liabilities		19,331			10,619
Other current liabilities		14,698			15,602
Total current liabilities		259,333			236,228
Long-term liabilities:
Deferred revenue, noncurrent		5,637			4,738
Convertible senior notes		638,165			441,514
Deferred tax liabilities		13,608			10,065
Other long-term liabilities		14,880			16,094
Total liabilities		931,623			708,639
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2021 and December 31, 2020, respectively		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized, 37,612,199 and 35,449,447 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		38			35
Additional paid-in capital		671,434			542,776
Accumulated deficit		(315,105	)		(293,316	)
Accumulated other comprehensive income		213			2,810
Total stockholders’ equity		356,580			252,305
Total liabilities and stockholders’ equity	$	1,288,203		$	960,944

See accompanying notes to condensed consolidated financial statements.

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended March 31,
	2021			2020
Revenue	$	82,210		$	58,900
Cost of revenue		25,280			20,889
Gross profit		56,930			38,011
Operating expenses:
Sales and marketing		34,527			29,588
Research and development		18,079			14,172
General and administrative		22,562			15,911
Total operating expenses		75,168			59,671
Operating loss		(18,238	)		(21,660	)
Other expense, net:
Interest and investment income		133			1,573
Interest expense		(6,560	)		(5,922	)
Loss on extinguishment of convertible notes and capped call modification		(2,888	)		—
Other expense, net		(49	)		(77	)
Total other expense, net		(9,364	)		(4,426	)
Loss before income taxes		(27,602	)		(26,086	)
Benefit from income taxes		5,813			701
Net loss	$	(21,789	)	$	(25,385	)
Net loss per share attributable to common stockholders:
Basic	$	(0.60	)	$	(0.74	)
Diluted	$	(0.60	)	$	(0.74	)
Weighted-average common shares outstanding:
Basic		36,386,819			34,075,071
Diluted		36,386,819			34,075,071

See accompanying notes to condensed consolidated financial statements.

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2021			2020
Net loss	$	(21,789	)	$	(25,385	)
Other comprehensive loss:
Foreign currency translation adjustment, net of taxes		(2,597	)		(6,520	)
Total comprehensive loss	$	(24,386	)	$	(31,905	)

See accompanying notes to condensed consolidated financial statements.

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Common stock					Additional paid-in			Accumulated			Accumulated- other comprehensive
	Shares			Par value		capital			deficit			income			Total
Balance at December 31, 2020		35,449,447		$	35	$	542,776		$	(293,316	)	$	2,810		$	252,305
Issuance of common stock in connection with acquisition		162,820			—		23,032			—			—			23,032
Stock-based compensation		—			—		12,770			—			—			12,770
Vesting of restricted stock units and performance-based restricted stock units		64,304			1		—			—			—			1
Restricted stock units and performance-based restricted stock units withheld to settle employee tax withholding liability		(11,649	)		—		(1,611	)		—			—			(1,611	)
Exercise of stock options		52,955			—		1,604			—			—			1,604
Issuance of shares under employee stock purchase plan		23,499			—		2,451			—			—			2,451
Equity component of convertible notes due 2026, net of allocated issuance costs and taxes		—			—		99,000			—			—			99,000
Purchase of capped call hedge for the convertible notes due 2026, including issuance costs		—			—		(35,124	)		—			—			(35,124	)
Equity component of settlement of convertible notes due 2022		1,870,823			2		15,650			—			—			15,652
Termination and modification of capped call hedge for convertible notes due 2022		—			—		10,886			—			—			10,886
Other comprehensive loss		—			—		—			—			(2,597	)		(2,597	)
Net loss		—			—		—			(21,789	)		—			(21,789	)
Balance at March 31, 2021		37,612,199		$	38	$	671,434		$	(315,105	)	$	213		$	356,580

	Common stock					Additional paid-in			Accumulated			Accumulated- other comprehensive
	Shares			Par value		capital			deficit			loss			Total
Balance at December 31, 2019		33,848,627		$	34	$	425,945		$	(199,920	)	$	(5,747	)	$	220,312
Issuance of common stock in connection with acquisitions		301,941					30,434			—			—			30,434
Stock-based compensation		—			—		10,368			—			—			10,368
Vesting of restricted stock units		44,606			—		—			—			—			—
Restricted stock units withheld to settle employee tax withholding liability		(4,483	)		—		(400	)		—			—			(400	)
Exercise of stock options		126,374			—		2,989			—			—			2,989
Issuance of shares under employee stock purchase plan		30,943			—		1,710			—			—			1,710
Other comprehensive loss		—			—		—			—			(6,520	)		(6,520	)
Net loss		—			—		—			(25,385	)		—			(25,385	)
Balance at March 31, 2020		34,348,008		$	34	$	471,046		$	(225,305	)	$	(12,267	)	$	233,508

See accompanying notes to condensed consolidated financial statements.

EVERBRIDGE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(21,789	)	$	(25,385	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		10,843			6,656
Amortization of deferred costs		3,722			2,922
Deferred income taxes		(6,701	)		(1,246	)
Accretion of interest on debt		6,313			5,436
Loss on extinguishment of convertible notes and capped call modification		2,888			—
Provision for credit losses and sales reserve		1,562			925
Stock-based compensation		12,685			10,310
Other non-cash adjustments		(147	)		—
Changes in operating assets and liabilities:
Accounts receivable		11,482			445
Prepaid expenses		(1,221	)		(3,057	)
Deferred costs		(3,450	)		(4,720	)
Other assets		(2,768	)		(4,069	)
Accounts payable		(911	)		(1,072	)
Accrued payroll and employee related liabilities		(2,130	)		3,221
Accrued expenses		3,012			1,732
Deferred revenue		8,373			5,118
Other liabilities		(1,955	)		3,585
Net cash provided by operating activities		19,808			801
Cash flows from investing activities:
Capital expenditures		(1,812	)		(524	)
Payments for acquisition of business, net of acquired cash		(32,401	)		(34,941	)
Additions to capitalized software development costs		(2,495	)		(2,004	)
Net cash used in investing activities		(36,708	)		(37,469	)
Cash flows from financing activities:
Proceeds from issuance of convertible notes		375,000			—
Payments of debt issuance costs		(9,562	)		(131	)
Purchase of convertible notes capped call hedge		(35,100	)		—
Repurchase of convertible notes		(58,641	)		—
Proceeds from termination of convertible notes capped call hedge		10,650			—
Restricted stock units withheld to settle employee tax withholding liability		(1,610	)		(400	)
Proceeds from employee stock purchase plan		2,451			1,710
Proceeds from stock option exercises		1,604			2,989
Net cash provided by financing activities		284,792			4,168
Effect of exchange rates on cash, cash equivalents and restricted cash		(315	)		(666	)
Net increase (decrease) in cash, cash equivalents and restricted cash		267,577			(33,166	)
Cash, cash equivalents and restricted cash—beginning of period		475,630			539,662
Cash, cash equivalents and restricted cash—end of period	$	743,207		$	506,496
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	318		$	184
Taxes, net of refunds received		674			—
Supplemental disclosure of non-cash activities:
Common stock issued in connection with acquisitions		23,032