Everbridge (EVBG): A Saas, Buying its Moat

Sep16 IPO company w/fairly strong performance/potential in a space where there appears to be very little competition. Pure SaaS playing in crisis management and communication space, with impressive list of top line cliental and solid retention rate.

Investments into additional product markets (which appear to be complimentary and proving out but it is early days) have delayed the company from meeting long-term model goals for Adjusted EBITA Margins… something to watch.

I’m happy to have undertaken the analysis because it proved out that the company has some red flags that need closely monitored - as well as - proved useful in digging into the numbers versus trusting screeners. In short, it is not a bad company, but it was not as great of steal as I once thought. Will continue to watch and appreciate any feedback and input.

Thanks to Ray for letting my steal his template and manipulate it

  • Just a Fool

According to the company, Everbridge 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 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, cyber-attacks or other incidents such as product recalls or supply-chain interruptions, 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.

Employees 581

52-WK HIGH 53.42
PRICE 7/09/18 48.90
52-WK LOW 21.56

Price Change since IPO 320%
Price Change Y-T-D 65.2%

EV/Sales (ttm) 12.2
P/S (ttm) 7.9

Since its IPO on 11/17/2017, the Everbridge stock price has realized a substantial 320% gain in 2 years. At its IPO, Everbridge carried a EV/S of 6.7x, which has grown to 12.2x today.

PASS Large Addressable Market (TAM): $45B in 2020
PASS TAM that is expected to grow significantly (TAM): 20% CAGR
PASS Products that customers love: https://www.everbridge.com/customers/ - Testimonials
PASS Strong Dollar Expansion Rate: 112%
PASS A lot of reoccuring revenue: 97% of all revenue is reoccurring with 2+ year contracts and 95% retention rate

PASS Small Market cap, preferably less than $10B: $1.4 B
FAIL High Margins: 72% margins could be improved
FAIL: Growing Profitability: Acquisitions have resulted in negative EBITA and EPS trending
PASS: Light Asset Models: SaaS play
PASS: Not a ton of stock comp: Extremely low
FAIL: High inside ownership: ~13% inside ownership

Here’a company that

  • was started following the September 11th attacks in response to the lack of mass notifications
  • In 2012 began expanding into the market to provide mass notifications
  • In 2014 recognized as the Leader in Gartner’s last Emergency Mass Notification Systems Magic Quadrant; “ We believe Everbridge provides the powerful, easy-to-use solutions to help you deliver mass notifications for emergencies, STEMI alerts, code alerts, IT incident response, HIPAA-compliant messaging and much more."
  • Went public on the NASDAQ in 09/2016
    -since its IPO, has realized YoY revenue growth of 31%, 36%, and 34% for 2016, 2017 and Q1 ’18, respectively. The company guidance and financial outlook for the FY’18 the company guidance expects 34% YoY revenue growth.

-since IPO has been acquiring companies to diversify product offerings and build moat around critical event management, all folding into SaaS model
02/2018 - United Messaging Systems
01/2017 - IDV Solutions
12/2016 - Crisis Commander

This company came to my attention via the BVP cloud index (https://www.bvp.com/strategy/cloud-computing/index), when I noticed that it had a low EV/S ration, yet had a 40% efficiency score. (Note, this research reveals that perhaps something with the EV/S is off on the BVP)

Finally, directly from their Investor Day held on June 14, 2018

  • 96% of revenue is recurring subscription
  • 95% client retention rate
  • 110%+ annual revenue retention rate
  • 2 year average length of customer contract ($1 spent to acquire $1 first year revenue, $0.06 for retaining subsequent years)
  • Non-Mass notification bookings (TTM basis) grew 48% from Q1 ’17 to Q1’18
  • Number of multi-product deals signed grew 30% from 54 to 70
  • 7 straight quarters of exceeding guidance
  • Recent purchase of UMS ($33.6 M) expands Everbridge reach to 1,200 customers in Northern Europe, as well as, major public safety agencies in Virginia, Georgia, Mass., West Beghal, and the U.S. Navy
    The company’s platform sent over 2 billion messages in 2017, and offers the ability to reach more than 200 countries and territories with secure delivery to over 100 different communication devices. 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.

Active Clients
https://www.everbridge.com/customers/ - Testimonials

Period Active Clients
(in thousands)
Q1 ’18 3,811
Q3 ’17 3,560
Q1 ’17 3,318
Q4 ’16 3,205
Q4 ’11 867

Everbridge has grown their customers 867 in 2011 to a total of 3,811 customers at the end of Q1 2018.
They have expanded to:
• 25 of the 25 busiest North American airports
• 4 of the 4 largest global CPA firms
• 9 of the 10 largest investment banks
• 9 of the 10 largest U.S. cities
• 6 of the 10 global auto makers
• 6 of the 10 largest global consulting firms
• 6 of the 10 largest high tech companies (NVIDIA, Hulu, Rackspace)
• 5 of the 10 largest health insurers

Everbridge was founded based on Mass Notification services and has expanded since 2011 to adjust to the larger critical event management markets, offering products falling under three markets (TAM included):
https://seekingalpha.com/article/4181999-everbridge-evbg-inv… - Investor Day Presentation

Mass Notification & Incident Management
2015 TAM: $2.5B
2020 TAM: $6.4B (+20% CAGR)
• Mass Notification
• Incident Management
• Secure Messaging
• Community Engagement

IT and IoT Alerting
2015 TAM: $3.5B
2020 TAM: $10.7B (+25% CAGR)
• IT Alerting
• IoT

Critical Event Management
2015 TAM: $14.9B
2020 TAM: $29.0B (+14% CAGR)
• Critical Event Data
• Visual Command Center
• Crisis Commander
• Safety Connection

Everbridge is currently focused on the organic upsell potential for Critical Event Management, specifically with Corporate and HealthCare customers. Everbridge reports that Critical Event Management (CEM) deals range from $210-$1,400K, giving them a $1.8 B opportunity across 2,660 current customers.

Everbridge has been finding success diversifying from Mass Notification through results:
MN New Products
Q4 ’14 98% 2%
Q1 ’15 94% 6%
Q2 ’15 88% 12%
Q3 ’15 83% 17%
Q4 ’15 78% 22%
Q1 ’16 74% 26%
Q2 ’16 73% 27%
Q3 ’16 72% 28%
Q4 ’16 70% 30%
Q1 ’17 67% 33%
Q2 ’17 60% 40%
Q3 ’17 58% 42%
Q4 ’17 54% 46%
Q1 ’18 51% 49%

Everbridge has seen increases in # of signed multi-product deals per quarter
Q1 ’17 54
Q2 ’18 70

Everbridge has seen growth in $100,000+ deals
Q1 ’17 4
Q2 ’18 19

Everbridge is seeing acceleration in Non-Mass bookings
Q1 ’17 33% of bookings
Q2 ’18 49% of bookings (48% growth)


Corporate financials for Everbridge (EVBG) indicate the following:
• Solid and stable growth in YoY revenue and share price;
• Since its IPO, generally operates with negative adjusted EBITA related to new product development and acquisition
• Stables gross margins at 70%-72% over the recent past 5 quarters;
• Stable capital structure.

Revenue, Net Income, EPS

Cost of Gross Net Diluted
FY REVENUE Change Revenue Margin Income Change EPS YoY
($M) YoY ($M) % ($M) YoY
2015 $58.7 38% $21.3 70% -10.8 -1700% -0.39
2016 $76.9 31% $25.3 72% -11.3 -4.3% -0.68 -74%
2017 $104.4 36% $34.5 72% -19.6 -74% -0.70 -3%

Q3’18 gross margin was 43.6%, compared to 43.0% in Q3’17, an increase of 60 basis points. This improvement was largely driven by a lower inventory reserve expense as a result of improvements to their inventory management capabilities. This was partially offset by a year-over-year increase in shipping and freight expenses and to a lesser extent shrink.

GROSS Marketing R&D G&A Adjusted EBITA
2015 70% 44% 19% 18% -6%
2016 72% 44% 19% 15% 0%
2017 72% 43% 20% 15% 0%

Targets 77-82% 37-39% 14-16% 8-10% 23-25%

Key Metrics - Retention Rate

Everbridge runs a nearly pure SaaS shop which is focused a land and expand model, often relying on Mass Notification subscriptions to be the “land” and then trying to “expand” critical event management. This will be something to track moving forward, if they are successful, we should see these retention rates begin to grow, along with the growth of the customer base.

Period Revenue Retention Rate
2013 112%
2014 111%
2015 112%
2016 112%
2017 112%

Everbridge has an okay current ratio, largely driven by acquisitions over the past several years

Cash & cash equivalents (mrq) $145.96 M
Working Capital $183.46 M
Current Ratio (mrq) 2.1
LT Debt (mrq) $89.48M
Stockholders’ Equity $ 55.99 M

Stock-Based Compensation (SBC)
SBC/revenue ratios are favorably very low.

Period SBC SBC/Revenue
FY 2017 $0.578 0.5%
FY 2016 $0.180 0.2%

The Everbridge guidance and financial outlook for Q2 2018 and for the fiscal year 2018, ending on December 31, 2018 are as follows:

Net Revenue $34.0-34.3 million
Adjusted EPS -0.23 - 0.22

FY 2018
Revenue $138.7 - 139.8 million. 34% YoY growth
Adjusted EBITDA -0.59 - 0.57

CEO Jaime Ellertson will be transitioning to Executive Chairman of the board over the next 12-18 months as Everbridge will begin searching for a successor.

For TA experts:
Q1 Results and Guidance:
Latest 10-K (2017)


Here is Everbridge’s take on its competition
The market for CEM solutions is highly fragmented, intensely competitive and constantly evolving. We compete with an array of established and emerging companies, many of whom are single product or single market focused, as well as in-house solutions. With the introduction of new technologies and market entrants, we expect the competitive environment to remain intense going forward.The primary competitors for our Mass Notification and Incident Management applications include: BlackBerry Limited, F24 AG, Enera Inc., Nuance Communications, Inc., OnSolve, LLC and SunGard Data Systems Inc. The primary competitors for our IT Alerting application include: PagerDuty, Inc. and xMatters, Inc. The primary competitors for our Secure Messaging application include: DocHalo, LLC, Spok, Inc., Perfect Serve, Inc. and TigerText, Inc. With respect to our recent acquisitions, the primary competitors for our Visual Command Center and Crisis Commander applications include Planet Risk Inc. and In Case of Crisis, respectively.

Everbridge believes they are creating a new category when it comes to critical event management and they are (through acquisition in several cases), the clear market leader in
• Visual Command Center (competition in house builds) allows tracking and visualization of alerts when potential risks occur within proximity of an organization’s physical location, suppliers, assets or people

• Safety Connection (disaggregated mobile application) - enables organizations to send notifications based on dynamic last known location of an individual, including airport, street, building floor or conference room.

• Mass Notification (competition is regional)

• PAS/LBAS (competition is cell broadcaster vendors versus 70+ patents for population alerting to protect Everbridge IP). UMS’s Population Alerting System (PAS) provides 2-way SMS broadcast capabilities to an entire mobile population. To accomplish this, UMS has the unique ability to message the mobile phones of anyone connected to a carrier’s cell towers. The company also provides Location-Based Alerting technology which enables municipalities to geographically pinpoint where to send notifications within a region. This capability is equally applicable for national and global companies who want to reach local and traveling employees, automating the alert by preferred language.

• IT Alerting (4-5 NA competitors versus Cross Enterprise leader of EVBG) - enables IT professionals to alert and communicate with key team members during an IT incident or outage, including cyber security breach.


Follow up on Everbridge, who recently reported a revenue beat and issued an earnings raise.

I am struggling to backout and understand their margins given their acquisition activity of late, so bear with me (or help out).

Q2 Release: https://ir.everbridge.com/phoenix.zhtml?c=254229&p=irol-…
Latest Analyst PPT: http://phx.corporate-ir.net/External.File?t=1&item=VHlwZ…

Q2 revenue was up YoY by 43% to $35.8M
International customers contributes to 19% of revenue, up 90% from 10% contribution YoY

Customers continued to grow, moving to 4,158 total customers
This is a critical metric as Everbridge’s strategy for new customers is to land its Mass Notification Product (those pesky emergency alerts we receive via SMS), and then expand offerings to local, state, federal, and commercial companies on crisis management (see below).

I say this is critical because 90% of EVBG revenue for the past 8 quarters is existing customers. FYI - contracts average 2 years.

Gross margins fell to 68% to 71%, management noted this was due to the expansion into international markets

Raised year-end guidance to $143M to $144M revenues, with an adjusted EPS of (0.58) to (0.56)

Color Commentary on Strategy
EVBG’s goal is to land new customers using the Mass Notification Product (SMS alerts).

The product dominates this space in the US market as most Fortune 100 companies use this product for employee communication during a crisis. Additionally, many state and federal agencies also use this solution.

Once landed, EVBG seeks to expand offerings related to how the crisis is actually managed by emergency response teams.

The premium products supports their situational awareness, their communications, their threat analysis, and their response operations.

There are additional partner premium offerings including the integration of social media feeds, weather feeds, threat intelligence feeds, and integration into GIS mapping products.

The product is sticky because of the Mass Notification solution, and the premium offerings help consolidate and coordinate the emergency response process.

The opportunities for new customers exist in the international space, and the opportunities for new products existing across their user base.

Acquiring their Markets
I’m unsure how to get a good grasp on operations, since the company has purchased Unified Messaging System (UMS) for $32M (Norway, Sweden, and India market leaders along with a purse of IP), Planet Risk for $2M (analytics and visualization company), and Respond Beheer for $2.3M (Netherlands market leader).

EVBG makes money by selling space to users by product. They are quickly eliminating smaller players through acquisition (it reminds me a bit of AAXN).

I will continue to track and watch this company, and depending on how the rest of earnings season shakes out, I may move into a starter position with the company. I like the accelerating revenue growth, I like the movements into the international mass notification markets, and I like the uptake of expansion productions from their existing customer base.


PRICE 7/09/18 48.90
PRICE 08/23/18 59.80 +22%

Sauls post on category crushers made me look harder at EVBG and expand my starter position. Nobody competes with EVBG in the mass notification market and they have traction in expanding their offerings and accelerating revenues.

I’m curious as to how the company will look once the acquisition and growth investing slows down, but for now, I’m convinced they are dredging a solid moat in a market that isn’t going away.


Excellent breakdown of Everbridge.

In November Q3 revenues were announced +43% with customers +29%, 4,267 vs 3,303

Finding this post I noticed price closed today at virtually same level as 8/23. Am trying to figure out what I’m missing. Revenues are accelerating while customer count steadily grows.

CaptainCCS posted this recently. https://discussion.fool.com/everbridge-evbg-outside-the-box-3410…

During the 3Q call they announced the following which opens up huge market:
Received a Provisional Authorization ¶ for Impact Level 2 from the U.S. Defense Information Systems Agency (DISA), the IT combat support organization of the Department of Defense (DoD). This authorization enables all DoD missions and agencies to leverage the Everbridge Suite of solutions.
Announced that JARVISS (Joint Analytic Real-Time Virtual Information Sharing System) is now the U.S. Army’s enduring enterprise system for threat visibility. The Everbridge platform is powering JARVISS, creating a premier global threat information sharing system that will enable the Army to effectively and efficiently identify and assess incidents and threats, in close proximity to military facilities, in a near real-time environment.

(A friend introduced me to this board in December. Heartfelt Thank You to Saul and everyone for sharing your insight. I’ve reduced my portfolio to 13 stocks from 35 individual plus 25% SPX500 12% MFMS/QQQ ETFs. Understanding the benefit of recurrent revenue and the SaaS model, I feel much more positive navigating the turbulent market.)

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“Finding this post I noticed price closed today at virtually same level as 8/23. Am trying to figure out what I’m missing. Revenues are accelerating while customer count steadily grows.“

This is true for TTD, SQ, WIX, NEWR, ZS, and other stocks on this board (AYX and TWLO notable exceptions)

This tells me that your observation is more related to macro market pressures in this sector versus company specific reactions.

For what it was worth, I was screening growth companies today (>30% growth and margins >60%), and I noted that EVBG’s 43% growth outpaced its 5year average of 32%.

They just released preliminary earnings of another 43% quarter.

Looking forward to the commentary.


Growth has been accelerating 22.8%, 25%, 27.3%, 29.2%, 34%, 43%, 43%, 43%

From the conference call:
For the full year, we generated revenue of $147.1 million, up 41% over 2017 and delivered accelerating growth while still beating our adjusted EBITDA guidance.

During the fourth quarter, we blew it out on every metric we track. We added record 155 net new enterprise customers, bringing our total enterprise customer count to 4,422. This quarterly increase is well above our historical range of roughly 100 to 125 net new customer additions. And in Q4, we continue to drive overall dollar based retention consistent with past quarters in the mid-90% range and net retention of over 110%.

Everbridge saw a strong contribution of new deal activity coming from new products, such as IT Alerting, Safety Connection and our Visual Command Center solutions. These new products contributed a record 55% to all new and growth sales made in the quarter.

Our core Mass Notification products drove 45% of all new and growth sales, with particular strength in international markets. These products were often purchased in multi-product deals. Q4, we drove 93 multi-product deals, up 33% from a year ago. These strong product sales results drove the overall value we see in each transaction, as reflected in the growth in our average deal size or ASP increasing to over $67,000 on a trailing 12-month basis, up 31% year-over-year.

In fact, in the fourth quarter, Everbridge closed 32 deals valued at over $100,000 per year, a new record and more than a 100% growth in the number of deals of that magnitude just one year ago. We also saw substantial demand for our most strategic suite, with a record number of 11 Critical Event Management deals from new and existing customers adopting our multi-product platform or adding products to expand into our CEM suite. This brings the number of CEM customers at the end of Q4 to 35, up 45% from just a quarter ago.

And international revenue continued to grow rapidly, increasing over 175% from a year ago, another record. Total international represented 20% of overall revenue.

Seems that you can’t turn on the news without a terrible event across the globe. Living in Napa, I’ve witnessed firsthand the devastation from wildfires, natural disasters and deranged shooters. Nixle alerts, which are only a small piece of the portfolio, will become more and more widespread.
I’m long EVBG currently 2.5% of my portfolio.


Everbridge first came on my radar when I saw the company included in the Motley Fool Small Cap ETF.
which is public information.

Then I noticed this:

MFAM Global Opportunities Fund Results: Fourth Quarter 2018
January 15, 2019 Morningstar Rating:5 Stars

We don’t know whether a recession is imminent – although the data doesn’t suggest it – but we are confident that a well-constructed portfolio of quality growth businesses that are likely to be increasingly important to the world over time has a low likelihood of permanent loss. Such businesses aren’t immune to the macro environment, but they control their own destiny to a greater degree and, we believe, are likely to achieve wonderful returns over the long haul.

The best performing stock was one we purchased in mid-November and added to later in the month: Everbridge, the leader in critical-event management and threat detection. Its software, data, and tools help facilitate communication during times of chaos — think phone alerts for things like severe weather or an active shooter. They also help manage critical assets and infrastructure and predict likely future threats. The company has won business with the U.S. government and military institutions, opening new markets and making its market leadership even clearer.