Q3 Update: EVBG - Accelerating Revs

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Building on past analysis: https://discussion.fool.com/everbridge-evbg-a-saas-buying-its-mo…

Q3 Release: https://ir.everbridge.com/phoenix.zhtml?c=254229&p=irol-…

My note: I can’t recall who said it, but I thought it was said well, I’m not invested in SaaS companies. I’m invested in companies solving issues in different areas (SQ - financial, AYX - data analytics, ZS - cyber security, TTD - advertising, OKTA - identity and security, EVBG - critical event management, AAXN - law enforcement evidence management, TWLO - communications)

There is no other company that I’m aware of that is competing with EVBG in addressing two issues: improving communications between those impacted by an emergency and those responding to an emergency; improving how quickly and efficiently emergencies can be recognized, evaluated, managed, and coordinated. Every company in the world operates with the goal and responsibility to keep their employees safe and secure, Everbridge continues to be a dominant force in that space.

Q3 Summary
The Numbers
Current Market Cap: $1.35B
Q3 Revenues: $38.9M (+43% YoY) beating guidance of $38.2
Q3 Gross Margin: 70.2% (down from 72% Q317)
Q3 Customer Count: 4,267 (+29% YoY)
Q3 Deferred Revenues: $88.6M (+30% YoY)
Q3 Net Retention Rate: >110% (historically 110%-112%)

The Guidance
Q4 Revenues: $40.7 to $41.0 (+41% YoY guide)
TAM discussion: $20B new TAM from EVBG

Land-and-Expand Hit Their Marks
The Bull Theory here is that EVBG can grow their market dominant position in Emergency Mass Notifications through federal and state adoption (those texts you get for Amber Alerts… active shooters… etc., etc) and expand their critical event management offerings to companies that grow revenues.

The company seeks to expand beyond Mass Notification and into Critical Event Management (CEM), or in layman’s terms, giving a customer the ability to assess, analyze, communicate, and manage an emergency from a single platform (today, these are all separate solutions)

LAND Wins Continues to Ramp
Everbridge continued to build out its federal presence, including:

  • International growth made up 20% of revenues coming in with 150% YoY growth
  • Domestically, FedRAMP approval with management stating on the CC “we estimate the federal market opportunity to be in excess of $1B, significantly expanding our TAM”
  • Received a Provisional Authorization for Impact Level 2 from the U.S. Defense Information Systems Agency (DISA), the IT combat support organization of DoD. This basically enabled all DoD missions and agencies to leverage Everbridge solutions.
  • Announced that their system JARVISS became the "U.S. Army’s enduring enterprise system for threat visibility…Everbridge platform enables JARVISS users to geo-locate DoD assets in a potential impact zone and disseminate and share information through the JARVISS Mobile App, text alerts, e-mails and other modalities…JARVISS is currently being rolled out Army-wide with pilots planned for other services and government agencies over the coming year.

EXPAND shows early evidence of opportunity
Everbridge touted several impressive wins and stats in this area, including:

  • 50% new business was non-mass notification products
  • 107 multiproduct deals is a 95% expansion YoY and is continued acceleration of multiproduct deals for EVBG
  • Signed a number of new CEM deals… with contract values that range from 5x to 15x our overall ASP
  • New multi-product deals are driving a higher Average Sales Price (ASP) per customer up to $55K per customer (+33%)

Chevron: Example of how EVBG builds this new market
I thought I would add this color from the conference call because it added great clarity - to me - as to what EVBG is facing as they literally build their own market

From CEO:
"Chevron chose our Risk Data-as-a-Service, our Visual Command Center, our Safety Connection and our core Mass Notification solution, in order words, the full CEM suite, as the centerpiece of their initiative for greater global threat awareness, risk management and resiliency. Chevron chose Everbridge CEM over a number of options for independent situational awareness, visualization of assets and automation of urgent communications due to our ability to provide that common operating environment for all critical events."

This was all released on November 5th, but I just got around to typing it up. I’d welcome any further deep dive into the company.

Price and Valuation things
Market Cap: $1.35B
EV Value: $1.7B
Stock Price: $47.38
52 week High: $63
52 week Low: $23.87
P/S: 10
EV/S: 12.5

Just a Fool,
Long EVBG
Long Pressure on Companies to Coordinate and Communicate with Employees
Long on companies that pull together many pieces of information to offer simple solutions

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Oh, I forgot my favorite line of the whole conf call

When asked about momentum and acceleration in FY19 outlook and guidance

“Would we are you past the 40% level? No. No that’s not going to be us. We’re pretty comfortable with the fact that in the past 1.5 years we’ve gone from the high 20s to the 30s to the mid 30s and now to the 40s. And sustaining that is a chore for any enterprise software company. So we do believe we are accelerating. We do believe we are getting best in class results as a result of our core business doing well, more of our customers purchasing multiple products, which drives up our ASP and CEM suite our most strategic piece being in the first inning and scoring runs and putting points on the board”

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How would a corporation use these products? “Independent situational awareness” and “visualization of assets” are pretty vague terms to me.

As for automation of urgent communication, I can’t see that being a huge seller in corporate America. The company I worked for did something similar years ago and I haven’t heard about it since. Something as a test basically to tell us not to go to work that day in event of an emergency. Not sure what they used for testing.

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Independent Situational Awareness

  • You use weather.com for weather situational awareness
  • You use Waze for traffic situational awareness
  • You use Twitter to monitor law enforcement activity
  • You use state agencies websites for incidents such as Wildfires or earthquakes
  • You use independent software to track your assets (GIS, GPS, etc)

Now imagine you are a state government (you have to see the whole state) or a multi-national corporation (the entire globe). The solution here is simple: Aggregate information

Visualization

  • Ok, so it is all aggregated, how do you use to to drive action? Solution: Put it on a map, or group assets that are in a threat area, in a manner that is digestible for your emergency management teams (who are often performing this as a second duty)

Automated Communication

  • So you can see assets that are facing natural or manmade hazards, how do you send instructions to assets? Solution: Have a team build out pre-defined thresholds / the ability to communicate by drawing a box around the area, etc.

I work in utilites, this occurs more often than you think. We are already subscribed to the Mass Notification feature, and previously, we used homegrown GIS solutions that required internal maintenance or we just added screens and let people make the decision. The hardest part was seeing who might be impacted and adding all their names to a mass communication. In fact, it was very labor intensive.

I’m guessing the integration allows for more interactive opportunities and reporting.

It also helps that companies of certain sizes in certain sectors are required by law to perform these kinds of activities. So regulatory can be a driver.

Just my opinion, but I encourage diving into the list of EVBG clients, they clearly target large companies with expansive footprints that are experienced in this space and have the existing business need.

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“As for automation of urgent communication, I can’t see that being a huge seller in corporate America. The company I worked for did something similar years ago and I haven’t heard about it since. Something as a test basically to tell us not to go to work that day in event of an emergency. Not sure what they used for testing.”

Wouldn’t this kind of thing be right up TWLO’s alley. They could do text,and email blasts to whoever the affected parties were.

Rob

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How would a corporation use these products?

I work for a private boarding school (we are a corporation) that was heavily impacted by fires/floods in southern California last winter (thankfully the school survived intact but they sure played havoc with operations for a while). After all that, we signed on with Everbridge for their emergency notification system to notify parents/staff/students in event of an emergency. Plus all our local governments seemed to be signing on with Everbridge also. Given that, I do believe they are “setting the standard” in this arena, although I can’t really speak to the products technically or what places them above other alternatives.

With emergencies and disasters, both man-caused and “natural”, seeming to be on the rise, I have to believe emergency preparedness is a growing concern for large corporations and governments alike.

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It’s a massive deal in Japan which has everyone’s mobile and every office Tannoy system wired for earthquake warnings. I’ve seen it in action many times.

New Zealand wanted to put in something similar for tsunamis.

A

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