Everbridge Announces Fourth Quarter and Full Year 2017 Financial Results

Fourth Quarter and 2017 Revenue Increase 37% and 36% Year-over-Year, Respectively

BURLINGTON, Mass.--()--Everbridge, Inc. (NASDAQ: EVBG), the global leader in critical event management and enterprise safety applications to help keep people safe and businesses running faster, today announced its financial results for the fourth quarter and full year ended December 31, 2017.

“We generated strong fourth quarter results, which once again exceeded the high end of our guidance for revenue and adjusted EBITDA, leading to a banner year for 2017 with 36% year-over-year growth in revenues and positive adjusted EBITDA for the second year in a row”

“We generated strong fourth quarter results, which once again exceeded the high end of our guidance for revenue and adjusted EBITDA, leading to a banner year for 2017 with 36% year-over-year growth in revenues and positive adjusted EBITDA for the second year in a row,” said Jaime Ellertson, Chief Executive Officer and Chairman of Everbridge. “During the fourth quarter, we continued our momentum in signing multi-product deals, increasing our average selling price, and expanding our customer base with significant new client wins. The recent announcement of our proposed combination with Unified Messaging Systems is expected to further expand our product portfolio while also extending our international footprint. We enter 2018 well positioned to build on our success and extend our market leadership as the market further embraces our Critical Event Management vision.”

Fourth Quarter 2017 Financial Highlights

  • Total revenue was $29.2 million, an increase of 37% compared to $21.3 million for the fourth quarter of 2016.
  • GAAP operating loss was $(5.2) million, compared to a GAAP operating loss of $(2.6) million for the fourth quarter of 2016.
  • Non-GAAP operating income was $0.1 million, compared to non-GAAP operating loss of $(0.9) million for the fourth quarter of 2016. Non-GAAP operating loss excludes stock-based compensation and amortization of intangible assets related to acquisitions.
  • GAAP net loss was $(5.8) million, compared to $(2.6) million for the fourth quarter of 2016. GAAP net loss per share was $(0.20), based on 28.3 million basic and diluted weighted average common shares outstanding, compared to $(0.10) for the fourth quarter of 2016, based on 27.1 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net loss was $(0.5) million, compared to $(0.9) million in the fourth quarter of 2016. Non-GAAP net loss per share was $(0.02), based on 28.3 million basic and diluted weighted average common shares outstanding, compared to $(0.03) for the fourth quarter of 2016, based on 27.1 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 $1.8 million, compared to $0.4 million in the fourth quarter of 2016. 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 $0.5 million compared to $3.0 million for the fourth quarter of 2016.
  • Free cash flow was an outflow of $(1.4) million compared to free cash of $1.5 million for the fourth quarter of 2016. Free cash flow is cash flow from operations, less cash used for capital expenditures and additions to capitalized software development costs.

Full Year 2017 Financial Highlights

  • Total revenue was $104.4 million, an increase of 36% compared to $76.8 million for 2016.
  • GAAP operating loss was $(19.3) million, compared to a GAAP operating loss of $(10.8) million for 2016.
  • Non-GAAP operating loss was $(6.2) million, compared to non-GAAP operating loss of $(4.5) million for 2016.
  • GAAP net loss was $(19.6) million, compared to $(11.3) million for 2016. GAAP net loss per share was $(0.70), based on 27.9 million basic and diluted weighted average common shares outstanding, compared to $(0.68) for 2016, based on 16.7 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net loss was $(6.6) million, compared to $(5.0) million in 2016. Non-GAAP net loss per share was $(0.24), based on 27.9 million basic and diluted weighted average common shares outstanding, compared to $(0.30) for 2016, based on 16.7 million basic and diluted weighted average common shares outstanding.
  • Adjusted EBITDA was $0.1 million, compared to $0.0 million in 2016.
  • Cash flow from operations was $4.9 million compared to $9.5 million for 2016.
  • Free cash flow was an outflow of $(3.0) million compared to free cash of $3.0 million for 2016.
  • Cash and cash equivalents as of December 31, 2017 totaled $102.8 million, an increase from $23.6 million as of September 30, 2017, primarily due to proceeds from a convertible notes offering completed during the fourth quarter.

Recent Business Highlights

  • Ended 2017 with 3,711 global customers, up from 3,205 at the end of 2016.
  • Selected by the New York City Emergency Management Department as the new mass notification platform for its citywide Notify NYC program.
  • Selected by the Vermont Department of Public Safety, Division of Emergency Management as the new mass notification service provider for its state-wide VT-ALERT program.
  • Announced offer to acquire Unified Messaging Systems to enhance product offerings and expand geographic footprint.

Business Outlook

Based on information available as of today, Everbridge is issuing guidance for the first quarter and full year 2018, including the anticipated impact from its proposed acquisition of Unified Messaging Systems, as indicated below.

           
       

First Quarter 2018

     

Full Year 2018

Total Revenue

$29.4   to   $29.7 $135.6   to   $137.1

GAAP net income/(loss)

$(12.5) $(12.2) $(46.0) $(45.0)

GAAP net income/(loss) per share

$(0.44) $(0.43) $(1.60) $(1.56)

Non-GAAP net income/(loss)

$(6.0) $(5.7) $(17.6)

$(16.6)

Non-GAAP net income/(loss) per share

$(0.21) $(0.20) $(0.61) $(0.58)

Basic and diluted weighted average shares outstanding

28.5 28.5 28.8 28.8

Adjusted EBITDA

$(2.8) $(2.5) $(4.0) $(3.0)

(All figures in millions, except per share data)

Conference Call Information

What:       Everbridge Fourth Quarter and Full Year 2017 Financial Results Conference Call
When: Wednesday, February 21, 2018
Time: 4:30 p.m. ET
Live Call: (844) 413-0949, domestic
(216) 562-0459, international
Replay: (855) 859-2056, passcode2669359, domestic
(404) 537-3406, passcode2669359, international
Webcast (live & replay):

http://ir.everbridge.com/phoenix.zhtml?c=254229&p=irol-EventDetails&EventId=5267538

 

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 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, over 3,700 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 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. Everbridge serves 9 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, six of the 10 largest global consulting firms, six of the 10 largest global automakers, 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 San Francisco, Lansing, Orlando, 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 first 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, 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)

December
31, 2017

   

December 31,
2016

 
Current assets:
Cash and cash equivalents $ 102,754 $ 60,765
Restricted cash 297 -
Short-term investments 42,908 -
Accounts receivable, net 31,699 17,812
Prepaid expenses 2,563 1,770
Other current assets   3,240         2,536  
Total current assets 183,461 82,883
Property and equipment, net 2,796 2,923
Capitalized software development costs, net 10,005 8,792
Goodwill 31,328 9,676
Intangible assets, net 8,634 3,940
Other assets   189         108  
Total assets $ 236,413       $ 108,322  
 
Current liabilities:
Accounts payable $ 2,446 $ 2,434
Accrued payroll and employee related liabilities 11,111 7,456
Accrued expenses 1,825 1,957
Deferred revenue 70,090 51,388
Contingent consideration liabilities 682 -
Other current liabilities   808         548  
Total current liabilities 86,962 63,783
Long-term liabilities:
Deferred revenue, noncurrent 2,982 1,246
Convertible debt 89,481 -
Deferred tax liabilities 482 494
Other long term liabilities   515         447  
Total liabilities $ 180,422       $ 65,970  
 
Stockholders' equity:
Common stock 28 27
Additional paid-in capital 164,995 132,246
Accumulated deficit (109,252 ) (89,618 )
Accumulated other comprehensive income (loss)   220         (303 )
Total stockholders' equity   55,991         42,352  
Total liabilities and stockholders' equity $ 236,413       $ 108,322  
 
                   
Consolidated Statements of Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
2017     2016 2017     2016
 
Revenue $ 29,175 $ 21,280 $ 104,352 $ 76,846
Cost of revenue   8,534         6,443     31,503         23,767  
Gross profit 20,641 14,837 72,849 53,079
70.75 % 69.72 % 69.81 % 69.07 %
Operating expenses:
Sales and marketing 13,409 9,188 46,998 34,847
Research and development 6,159 4,205 22,241 14,765
General and administrative   6,255         4,041     22,895         14,293  
Total operating expenses   25,823         17,434     92,134         63,905  
Operating loss   (5,182 )       (2,597 )   (19,285 )       (10,826 )
 
Other income (expense):
Interest and investment income 241 34 475 34
Interest expense (686 ) - (691 ) (506 )
Other income (expense), net   (25 )       (14 )   (86 )       (12 )
Total other income (expense), net   (470 )       20     (302 )       (484 )
Loss before income taxes   (5,652 )       (2,577 )   (19,587 )       (11,310 )
Income taxes, net   (112 )       (51 )   (47 )       24  
Net loss $ (5,764 )     $ (2,628 ) $ (19,634 )     $ (11,286 )
 
Net loss per share attributable to common stockholders:
Basic $ (0.20 ) $ (0.10 ) $ (0.70 ) $ (0.68 )
Diluted $ (0.20 ) $ (0.10 ) $ (0.70 ) $ (0.68 )
 
Weighted-average common shares outstanding:
Basic 28,286,286 27,149,528 27,862,375 16,659,561
Diluted 28,286,286 27,149,528 27,862,375 16,659,561
 
Other comprehensive income (loss):
Foreign currency translation adjustment, net 200 10 523 (290 )
of tax                
Total comprehensive loss $ (5,564 )     $ (2,618 ) $ (19,111 )     $ (11,576 )
 
 
Stock-based compensation expense included in the above:
(in thousands)
Three months ended Year ended
December 31, December 31,
2017     2016 2017     2016
 
Cost of revenue $ 312 $ 45 $ 578 $ 180
Sales and marketing 1,169 222 2,419 725
Research and development 776 85 1,514 348
General and administrative   2,170         584     4,788         1,848  
Total stock-based compensation $ 4,427 $ 936 $ 9,299 $ 3,101
 
                   
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended Year ended
December 31, December 31,
2017     2016 2017     2016
Cash flows from operating activities:
Net loss $ (5,764 ) $ (2,628 ) $ (19,634 ) $ (11,286 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 2,561 2,067 10,207 7,742
Loss on disposal of assets - - 15 74
Non-cash investment income (130 ) - (204 ) -
Deferred income taxes (109 ) 86 (47 ) (138 )
Non-cash interest expense on debt 493 - 493 67
Provision for doubtful accounts and sales return reserve 49 292 637 387
Stock-based compensation 4,380 929 9,218 3,056
Change in fair value of contingent consideration obligation (1,020 ) - (1,020 ) -
Increase (decrease) in operating assets and liabilities:
Accounts receivable, net (9,476 ) (1,904 ) (13,067 ) (2,295 )
Prepaid expenses 1,001 840 (551 ) (348 )
Other assets 195 647 (785 ) (1,096 )
Accounts payable (910 ) (674 ) (90 ) (423 )
Accrued payroll and employee related liabilities 1,333 (246 ) 3,596 1,312
Accrued expenses (78 ) 234 (132 ) 539
Deferred revenue 8,577 3,377 16,378 11,982
Other liabilities   (618 )       (52 )   (151 )       (70 )
Net cash provided by operating activities   484         2,968     4,863         9,503  
 
Cash flows from investing activities:
Capital expenditures (330 ) (231 ) (1,667 ) (970 )
Proceeds from sale of leaseback transaction - - 794 -
Payments for acquisition of business, net of acquired cash - (2,306 ) (21,235 ) (2,306 )
Additions to capitalized software development costs (1,574 ) (1,200 ) (6,160 ) (5,494 )
Change in restricted cash - - (294 ) -
Purchase of short-term investments (30,809 ) - (60,764 ) -
Maturities of short-term investments 12,060 - 18,060 -
Purchase of intangibles   -         (250 )   -         (250 )
Net cash used in investing activities   (20,653 )       (3,987 )   (71,266 )       (9,020 )
 
Cash flows from financing activities:
Proceeds from line of credit - - - 9,500
Payments on line of credit - - - (19,500 )
Principal payments on capital leases - - - (58 )
Payments of issuance costs relating to the line of credit and term loan - - - (19 )
Proceeds from public offering, net - - 10,444 69,750
Payments of public offering costs - (588 ) (872 ) (1,960 )
Proceeds from issuance of convertible notes 115,000 - 115,000 -
Payments of debt issuance costs (3,794 ) - (3,834 ) -
Purchase of convertible note capped call hedge (12,922 ) - (12,922 ) -
Payment on term loan

-

-

-

(5,000 )
Payment on note payable - - - (2,018 )
Payments on contingent consideration - - (3,750 ) -
Proceeds from employee stock purchase plan - - 1,540 -
Proceeds from option exercises 782 2 2,869 750
Proceeds from exercise of warrants   -         -     -         25  
Net cash provided by (used in) financing activities   99,066         (586 )   108,475         51,470  
 
Effect of exchange rates on cash and cash equivalents   229         74     (83 )       234  
Net increase (decrease) in cash and cash equivalents 79,126 (1,531 ) 41,989 52,187
 
Cash and cash equivalents, beginning of period   23,628         62,296     60,765         8,578  
Cash and cash equivalents, end of period $ 102,754       $ 60,765   $ 102,754       $ 60,765  
 
                   
Reconciliation of GAAP measures to non-GAAP measures
(in thousands, except share and per share data)
(unaudited)
Three months ended Year ended
December 31, December 31,
2017     2016 2017     2016
 
Cost of revenue $ 8,534 $ 6,443 $ 31,503 $ 23,767
Amortization of acquired intangibles (289 ) (567 ) (1,614 ) (2,318 )
Stock-based compensation   (312 )       (45 )   (578 )       (180 )
Non-GAAP cost of revenue 7,933 5,831 29,311 21,269
 
Gross profit 20,641 14,837 72,849 53,079
Amortization of acquired intangibles 289 567 1,614 2,318
Stock-based compensation   312         45     578         180  
Non-GAAP gross profit 21,242 15,449 75,041 55,577
Non-GAAP gross margin 72.81 % 72.60 % 71.91 % 72.32 %
 
Sales and marketing 13,409 9,188 46,998 34,847
Stock-based compensation   (1,169 )       (222 )   (2,419 )       (725 )
Non-GAAP sales and marketing 12,240 8,966 44,579 34,122
 
Research and development 6,159 4,205 22,241 14,765
Stock-based compensation   (776 )       (85 )   (1,514 )       (348 )
Non-GAAP research and development 5,383 4,120 20,727 14,417
 
General and administrative 6,255 4,041 22,895 14,293
Amortization of acquired intangibles (561 ) (215 ) (2,123 ) (916 )
Stock-based compensation   (2,170 )       (584 )   (4,788 )       (1,848 )
Non-GAAP general and administrative 3,524 3,242 15,984 11,529
 
Total operating expenses 25,823 17,434 92,134 63,905
Amortization of acquired intangibles (561 ) (215 ) (2,123 ) (916 )
Stock-based compensation   (4,115 )       (891 )   (8,721 )       (2,921 )
Non-GAAP operating expenses $ 21,147 $ 16,328 $ 81,290 $ 60,068
 
Operating loss $ (5,182 ) $ (2,597 ) $ (19,285 ) $ (10,826 )
Amortization of acquired intangibles 850 782 3,737 3,234
Stock-based compensation   4,427         936     9,299         3,101  
Non-GAAP operating income (loss) $ 95 $ (879 ) $ (6,249 ) $ (4,491 )
 
Net loss $ (5,764 ) $ (2,628 ) $ (19,634 ) $ (11,286 )
Amortization of acquired intangibles 850 782 3,737 3,234
Stock-based compensation   4,427         936     9,299         3,101  
Non-GAAP net loss $ (487 ) $ (910 ) $ (6,598 ) $ (4,951 )
 
Weighted average common shares outstanding, basic and diluted 28,286,286 27,149,528 27,862,375 16,659,561
 
Non-GAAP net loss per share $ (0.02 ) $ (0.03 ) $ (0.24 ) $ (0.30 )
 
Net loss $ (5,764 ) $ (2,628 ) $ (19,634 ) $ (11,286 )
Interest (income) expense, net 445 (34 ) 216 472
Income taxes, net 112 51 47 (24 )
Depreciation and amortization   2,561         2,067     10,207         7,742  
EBITDA (2,646 ) (544 ) (9,164 ) (3,096 )
Stock-based compensation   4,427         936     9,299         3,101  
Adjusted EBITDA $ 1,781 $ 392 $ 135 $ 5
 
Net cash provided by operating activities $ 484 $ 2,968 $ 4,863 $ 9,503
Capital expenditures (330 ) (231 ) (1,667 ) (970 )
Additions to capitalized software development costs   (1,574 )       (1,200 )   (6,160 )       (5,494 )
Free cash flow $ (1,420 ) $ 1,537 $ (2,964 ) $ 3,039
 
                     
(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
March 31, 2018 December 31, 2018
Low end     High end Low end     High end
 
Net loss $ (12.5 ) $ (12.2 ) $ (46.0 ) $ (45.0 )
Amortization of acquired intangibles 0.8 0.8 3.3 3.3
Stock-based compensation   5.7         5.7     25.1         25.1  

Non-GAAP net loss

$ (6.0 ) $ (5.7 ) $ (17.6 ) $ (16.6 )
 
Weighted average common shares outstanding, basic and diluted 28,500,000 28,500,000 28,800,000 28,800,000
 
Net loss per share $ (0.44 ) $ (0.43 ) $ (1.60 ) $ (1.56 )
Non-GAAP net loss per share $ (0.21 ) $ (0.20 ) $ (0.61 ) $ (0.58 )
 
Net loss $ (12.5 ) $ (12.2 ) $ (46.0 ) $ (45.0 )
Interest income (expense), net 1.3 1.3 5.6 5.6
Benefit from income taxes - - - -
Depreciation and amortization   2.7         2.7     11.3         11.3  
EBITDA (8.5 ) (8.2 ) (29.1 ) (28.1 )
Stock-based compensation   5.7         5.7     25.1         25.1  
Adjusted EBITDA $ (2.8 ) $ (2.5 ) $ (4.0 ) $ (3.0 )
 

Contacts

Media Contact:
Everbridge
Jeff Benanto, 781-373-9879
jeff.benanto@everbridge.com
or
Investor Contact:
ICR
Garo Toomajanian, 818-230-9712
ir@everbridge.com

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