Everbridge Announces Third Quarter 2023 Financial Results

Company Delivers Solid Third Quarter Revenue and Improved Profitability

BURLINGTON, Mass.--()--Everbridge, Inc. (Nasdaq: EVBG), the global leader in critical event management (CEM) and national public warning solutions, today announced its financial results for the third quarter ended September 30, 2023. Revenue for the third quarter was up 3% year-over-year to $114.2 million, and GAAP net income was $1.7 million, compared to a net loss of $(22.1) million for the third quarter of 2022.

“We delivered solid third quarter results as we continue to improve our go-to-market execution and overall operating efficiency,” said David Wagner, President and CEO of Everbridge. “We saw healthy year-over-year improvements, including our strongest recurring bookings quarter of the year, and efficiency improvements across the business allowing us to increase adjusted EBITDA by $8.5 million in the third quarter compared to last year.”

Patrick Brickley, Executive Vice President and Chief Financial Officer of Everbridge, added, “Our improving profitability is supported by continued strength in our subscription revenue growth despite challenges associated with one-time services and perpetual software license revenue, which were down year-over-year. In the fourth quarter, we expect to further improve our earnings while, at the same time, our one-time revenues are now expected to decrease by about $6 million compared to the fourth quarter of 2022. Our 2023 full-year guidance represents an approximately 100% year-over-year improvement in adjusted EBITDA.”

Wagner continued, “As we look forward, we believe consistent growth in our subscription revenues, strong expense management, and our streamlined product portfolio have us positioned for meaningful growth in profitability in 2024, which will keep us on track towards our goal of reaching the ‘Rule of 40’ by 2027.”

Third Quarter 2023 Financial Highlights

  • Total revenue was $114.2 million, an increase of 3% compared to $111.4 million for the third quarter of 2022. Revenue from subscription services was $104.3 million, an increase of 8% compared to $96.8 million for the third quarter of 2022. Revenue from professional services, software licenses and other was $9.8 million, a decrease of 33% compared to $14.6 million for the third quarter of 2022.
  • GAAP operating loss was $(12.7) million, compared to $(19.2) million for the third quarter of 2022.
  • Non-GAAP operating income was $18.6 million, compared to $9.8 million for the third quarter of 2022.
  • GAAP net income was $1.7 million, compared to GAAP net loss of $(22.1) million for the third quarter of 2022. GAAP basic net income per share was $0.04, based on 40.8 million basic weighted average common shares outstanding, GAAP diluted net loss per share was $(0.23) taking into the account the dilutive effect of convertible notes, based on 43.8 million diluted weighted average common shares outstanding, compared to $(0.56) of basic and diluted net income per share for the third quarter of 2022, based on 39.7 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net income was $20.2 million, compared to $12.3 million in the third quarter of 2022. Non-GAAP diluted net income per share was $0.46, based on 44.0 million diluted weighted average common shares outstanding, compared to $0.27 for the third quarter of 2022, based on 46.1 million diluted weighted average common shares outstanding.
  • Adjusted EBITDA was $23.7 million, compared to $15.2 million in the third quarter of 2022.
  • Cash flow from operations was an inflow of $17.0 million, compared to $18.0 million for the third quarter of 2022.
  • Adjusted for one-time cash payments related to our 2022 Strategic Realignment program, adjusted free cash flow was an inflow of $15.5 million, compared to $15.4 million for the third quarter of 2022.

Recent Business Highlights

  • Annualized Recurring Revenue (ARR) was $399 million, up 8% year-over-year.
  • CEM customer count increased to 405, up 32 sequentially and 59% year-over-year.
  • Unveiled Everbridge 360TM, new product innovation for customers to automate and simplify the management of critical events across a powerful, unified dashboard.
  • Awarded new patent in the field of Artificial Intelligence (AI), relevant to technology used in analytics dashboards for critical event management software systems.
  • Provided cell broadcast emergency alerting capabilities to successfully power the German government’s nationwide public warning system on Nationwide Warning Day, in conjunction with leading German mobile network operators (MNOs).
  • Announced the City of Glendale, Arizona as the latest U.S. city to deploy Everbridge to safeguard residents and visitors during emergencies and large-scale events.
  • Demonstrated the use of artificial intelligence technology within public warning capabilities at the 2023 Common Alerting Protocol (CAP) workshop in Switzerland.
  • Joined government and humanitarian leaders to showcase the technology and commitment to drive innovation and excellence in public warning systems at the Creating Effective Warnings for All conference in London.

Financial Outlook

Based on information available as of today, Everbridge is issuing guidance for the fourth quarter and full year 2023 as indicated below.

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year 2023 Guidance

 

 

Fourth Quarter 2023

 

 

Full Year 2023

 

 

Issued August 8, 2023

 

Revenue

$

114.0

 

to

$

115.5

 

 

$

447.0

 

to

$

448.5

 

 

$

450.0

 

to

$

452.0

 

Revenue growth

 

(3

)%

 

 

(1

)%

 

 

4

%

 

 

4

%

 

 

4

%

 

 

5

%

GAAP net loss

$

(6.3

)

 

$

(5.1

)

 

$

(34.3

)

 

$

(33.1

)

 

$

(43.7

)

 

$

(41.7

)

GAAP net loss per share

$

(0.15

)

 

$

(0.12

)

 

$

(0.84

)

 

$

(0.81

)

 

$

(1.07

)

 

$

(1.02

)

Non-GAAP net income

$

21.5

 

 

$

23.0

 

 

$

66.0

 

 

$

67.5

 

 

$

65.8

 

 

$

67.8

 

Non-GAAP net income per share

$

0.48

 

 

$

0.52

 

 

$

1.48

 

 

$

1.52

 

 

$

1.48

 

 

$

1.52

 

Adjusted EBITDA

$

25.6

 

 

$

27.1

 

 

$

83.5

 

 

$

85.0

 

 

$

84.0

 

 

$

86.0

 

(All figures in millions, except per share data)

Revenue

Based on information available as of today, Everbridge is issuing detailed revenue guidance for the fourth quarter and full year 2023. The following table presents disaggregated revenue by source for the fourth quarter and full year 2022 and guidance for the fourth quarter and full year 2023.

 

Fourth Quarter

 

 

Fourth Quarter 2023

 

 

Full Year

 

 

Full Year 2023

 

 

2022

 

 

Low End

 

 

High End

 

 

2022

 

 

Low End

 

 

High End

 

Subscription services

$

101.4

 

 

$

104.6

 

 

$

105.0

 

 

$

384.6

 

 

$

409.5

 

 

$

409.9

 

Professional services

 

8.7

 

 

 

6.7

 

 

 

7.1

 

 

 

29.3

 

 

 

25.0

 

 

 

25.4

 

Software licenses and other

 

7.0

 

 

 

2.7

 

 

 

3.4

 

 

 

18.0

 

 

 

12.5

 

 

 

13.2

 

Total revenue

$

117.1

 

 

$

114.0

 

 

$

115.5

 

 

$

431.9

 

 

$

447.0

 

 

$

448.5

 

(Dollars in millions)

Conference Call Information

What:

 

Everbridge’s Third Quarter 2023 Financial Results Conference Call

When:

 

Thursday, November 9, 2023

Time:

 

4:30 p.m. ET

Live Call:

 

(833) 685-0904, Domestic

 

 

(412) 317-5740, International

Replay:

 

(877) 344-7529, Passcode 7890007, Domestic

 

 

(412) 317-0088, Passcode 7890007, International

Webcast:

 

https://edge.media-server.com/mmc/p/9ogmk8nd (live and replay)

About Everbridge

Everbridge (Nasdaq: EVBG) empowers enterprises and government organizations to anticipate, mitigate, respond to, and recover stronger from critical events. In today’s unpredictable world, resilient organizations minimize impact to people and operations, absorb stress, and return to productivity faster when deploying critical event management (CEM) technology. Everbridge digitizes organizational resilience by combining intelligent automation with the industry’s most comprehensive risk data to Keep People Safe and Organizations Running™. For more information, visit https://www.everbridge.com/, read the company blog, and follow on Twitter. Everbridge… Empowering Resilience.

Key Performance Metric

Annualized Recurring Revenue (ARR) is defined as the expected recurring revenue in the next twelve months from active customer contracts, assuming no increases or reductions in the subscriptions from that cohort of customers. Investors should not place undue reliance on ARR as an indicator of future or expected results. Our presentation of this metric may differ from similarly titled metrics presented by other companies and therefore comparability may be limited.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income/(loss), non-GAAP net income/(loss), non-GAAP net income/(loss) per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and adjusted EBITDA margin.

Non-GAAP operating income/(loss) excludes amortization of acquired intangible assets, stock-based compensation, costs related to the 2022 Strategic Realignment, Anvil legal dispute accrual and change in fair value of contingent consideration. Non-GAAP net income/(loss) excludes amortization of acquired intangible assets, stock-based compensation, costs related to the 2022 Strategic Realignment, Anvil legal dispute accrual, change in fair value of contingent consideration, accretion of interest on convertible senior notes, gain (loss) on extinguishment of debt, capped call modification and change in fair value and the tax impact of such adjustments. EBITDA represents net income/(loss) before interest income and interest expense, income tax expense and benefit and depreciation and amortization expense. Adjusted EBITDA represents EBITDA as further adjusted for stock-based compensation expense, costs related to the 2022 Strategic Realignment, Anvil legal dispute accrual, change in fair value of contingent consideration and gain (loss) on extinguishment of debt, capped call modification and change in fair value. Free cash flow represents cash provided by (used in) operating activities minus cash used for capital expenditures and capitalized software development costs. Adjusted free cash flow represents free cash flow as further adjusted for cash payments for the 2022 Strategic Realignment.

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 anticipated impact on financial results for the fourth quarter of 2023 and the full fiscal year 2023. 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 successfully integrate businesses and assets that we may acquire; 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 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, 2022 filed with the SEC on February 24, 2023 and other subsequent filings with the SEC. 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)

 

 

September 30,

 

 

December 31,

 

 

2023

 

 

2022

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

97,697

 

 

$

198,725

 

Restricted cash

 

2,067

 

 

 

2,046

 

Accounts receivable, net

 

92,627

 

 

 

119,986

 

Prepaid expenses

 

15,192

 

 

 

13,133

 

Assets held for sale

 

22

 

 

 

6,485

 

Deferred costs and other current assets

 

36,112

 

 

 

31,866

 

Total current assets

 

243,717

 

 

 

372,241

 

Property and equipment, net

 

9,218

 

 

 

8,993

 

Capitalized software development costs, net

 

30,701

 

 

 

27,370

 

Goodwill

 

507,420

 

 

 

508,781

 

Intangible assets, net

 

137,670

 

 

 

166,177

 

Restricted cash

 

783

 

 

 

823

 

Prepaid expenses

 

1,141

 

 

 

1,709

 

Deferred costs and other assets

 

42,129

 

 

 

39,570

 

Total assets

$

972,779

 

 

$

1,125,664

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

13,244

 

 

$

10,854

 

Accrued payroll and employee related liabilities

 

25,072

 

 

 

31,175

 

Accrued expenses

 

16,744

 

 

 

13,566

 

Deferred revenue

 

223,529

 

 

 

233,106

 

Liabilities held for sale

 

170

 

 

 

2,062

 

Other current liabilities

 

6,594

 

 

 

10,644

 

Total current liabilities

 

285,353

 

 

 

301,407

 

Long-term liabilities:

 

 

 

 

 

Deferred revenue, noncurrent

 

7,226

 

 

 

9,278

 

Convertible senior notes

 

359,153

 

 

 

500,298

 

Deferred tax liabilities

 

5,048

 

 

 

6,236

 

Other long-term liabilities

 

17,805

 

 

 

19,334

 

Total liabilities

 

674,585

 

 

 

836,553

 

Stockholders' equity:

 

 

 

 

 

Common stock

 

41

 

 

 

40

 

Additional paid-in capital

 

761,279

 

 

 

721,143

 

Accumulated deficit

 

(430,139

)

 

 

(402,124

)

Accumulated other comprehensive loss

 

(32,987

)

 

 

(29,948

)

Total stockholders' equity

 

298,194

 

 

 

289,111

 

Total liabilities and stockholders' equity

$

972,779

 

 

$

1,125,664

 

Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

$

114,191

 

 

$

111,401

 

 

$

333,028

 

 

$

314,762

 

Cost of revenue

 

33,069

 

 

 

35,447

 

 

 

98,141

 

 

 

100,543

 

Gross profit

 

81,122

 

 

 

75,954

 

 

 

234,887

 

 

 

214,219

 

Gross margin

 

71.04

%

 

 

68.18

%

 

 

70.53

%

 

 

68.06

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

36,699

 

 

 

46,580

 

 

 

121,556

 

 

 

133,755

 

Research and development

 

23,852

 

 

 

25,177

 

 

 

73,469

 

 

 

75,355

 

General and administrative

 

31,204

 

 

 

23,357

 

 

 

80,633

 

 

 

72,786

 

Restructuring

 

2,109

 

 

 

37

 

 

 

2,794

 

 

 

6,779

 

Total operating expenses

 

93,864

 

 

 

95,151

 

 

 

278,452

 

 

 

288,675

 

Operating loss

 

(12,742

)

 

 

(19,197

)

 

 

(43,565

)

 

 

(74,456

)

Other income (expense), net

 

 

 

 

 

 

 

 

 

 

 

Interest and investment income

 

2,140

 

 

 

2,054

 

 

 

6,162

 

 

 

2,795

 

Interest expense

 

(724

)

 

 

(1,312

)

 

 

(2,258

)

 

 

(3,919

)

Gain (loss) on extinguishment of convertible notes, capped call modification and change in fair value

 

12,658

 

 

 

(4,770

)

 

 

12,658

 

 

 

(4,770

)

Other income (expense), net

 

(573

)

 

 

1,170

 

 

 

173

 

 

 

1,261

 

Total other income (expense), net

 

13,501

 

 

 

(2,858

)

 

 

16,735

 

 

 

(4,633

)

Income (loss) before income taxes

 

759

 

 

 

(22,055

)

 

 

(26,830

)

 

 

(79,089

)

(Provision for) benefit from income taxes

 

924

 

 

 

(25

)

 

 

(1,185

)

 

 

1,754

 

Net income (loss)

$

1,683

 

 

$

(22,080

)

 

$

(28,015

)

 

$

(77,335

)

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.04

 

 

$

(0.56

)

 

$

(0.69

)

 

$

(1.95

)

Diluted

$

(0.23

)

 

$

(0.56

)

 

$

(0.87

)

 

$

(1.95

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40,782,696

 

 

 

39,746,242

 

 

 

40,537,922

 

 

 

39,583,684

 

Diluted

 

43,844,334

 

 

 

39,746,242

 

 

 

43,734,429

 

 

 

39,583,684

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

(7,776

)

 

 

(19,879

)

 

 

(3,039

)

 

 

(48,424

)

Total comprehensive loss

$

(6,093

)

 

$

(41,959

)

 

$

(31,054

)

 

$

(125,759

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense included in the above:

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cost of revenue

$

1,285

 

 

$

1,978

 

 

$

4,757

 

 

$

4,276

 

Sales and marketing

 

2,398

 

 

 

6,415

 

 

 

13,346

 

 

 

14,320

 

Research and development

 

2,810

 

 

 

3,994

 

 

 

10,306

 

 

 

9,367

 

General and administrative

 

2,105

 

 

 

5,020

 

 

 

9,768

 

 

 

11,739

 

Total stock-based compensation

$

8,598

 

 

$

17,407

 

 

$

38,177

 

 

$

39,702

 

Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

1,683

 

 

$

(22,080

)

 

$

(28,015

)

 

$

(77,335

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

14,630

 

 

 

14,562

 

 

 

44,288

 

 

 

45,253

 

Amortization of deferred costs

 

4,986

 

 

 

4,625

 

 

 

14,478

 

 

 

13,365

 

Deferred income taxes

 

(332

)

 

 

436

 

 

 

(1,037

)

 

 

(7,132

)

Accretion of interest on convertible senior notes

 

684

 

 

 

1,168

 

 

 

2,122

 

 

 

3,492

 

(Gain) loss on disposal of assets

 

 

 

 

6

 

 

 

(352

)

 

 

940

 

(Gain) loss on extinguishment of convertible notes, capped call modification and change in fair value

 

(12,658

)

 

 

4,770

 

 

 

(12,658

)

 

 

4,770

 

Provision for credit losses and sales reserve

 

(123

)

 

 

(990

)

 

 

2,203

 

 

 

(712

)

Stock-based compensation

 

8,598

 

 

 

17,407

 

 

 

38,177

 

 

 

39,702

 

Other non-cash adjustments

 

 

 

 

 

 

 

 

 

 

(57

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

4,362

 

 

 

5,729

 

 

 

25,439

 

 

 

28,760

 

Prepaid expenses

 

(955

)

 

 

2,085

 

 

 

(1,567

)

 

 

17

 

Deferred costs

 

(5,567

)

 

 

(5,627

)

 

 

(18,815

)

 

 

(16,157

)

Other assets

 

1,749

 

 

 

1,368

 

 

 

(2,080

)

 

 

7,591

 

Accounts payable

 

2,870

 

 

 

1,015

 

 

 

1,936

 

 

 

(3,172

)

Accrued payroll and employee related liabilities

 

90

 

 

 

1,052

 

 

 

(6,103

)

 

 

(6,919

)

Accrued expenses

 

6,651

 

 

 

(2,474

)

 

 

2,139

 

 

 

(637

)

Deferred revenue

 

(6,712

)

 

 

(152

)

 

 

(11,885

)

 

 

(4,678

)

Other liabilities

 

(2,947

)

 

 

(4,865

)

 

 

(5,316

)

 

 

(11,278

)

Net cash provided by operating activities

 

17,009

 

 

 

18,035

 

 

 

42,954

 

 

 

15,813

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(1,945

)

 

 

(225

)

 

 

(4,124

)

 

 

(2,951

)

Proceeds from landlord reimbursement

 

88

 

 

 

1,219

 

 

 

88

 

 

 

1,219

 

Proceeds from sale of assets

 

 

 

 

 

 

 

4,368

 

 

 

 

Payment for acquisition of business, net of acquired cash

 

 

 

 

(1,202

)

 

 

 

 

 

(1,249

)

Additions to capitalized software development costs

 

(4,835

)

 

 

(4,173

)

 

 

(12,704

)

 

 

(11,609

)

Net cash used in investing activities

 

(6,692

)

 

 

(4,381

)

 

 

(12,372

)

 

 

(14,590

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

Repurchase of convertible notes

 

(129,579

)

 

 

 

 

 

(129,579

)

 

 

 

Payments associated with shares withheld to settle employee tax withholding liability

 

(2,529

)

 

 

(1,913

)

 

 

(6,218

)

 

 

(4,208

)

Proceeds from employee stock purchase plan

 

1,745

 

 

 

1,463

 

 

 

4,291

 

 

 

3,165

 

Proceeds from stock option exercises

 

25

 

 

 

17

 

 

 

1,300

 

 

 

99

 

Other

 

(19

)

 

 

(17

)

 

 

(57

)

 

 

(55

)

Net cash used in financing activities

 

(130,357

)

 

 

(450

)

 

 

(130,263

)

 

 

(999

)

Effect of exchange rates on cash, cash equivalents and restricted cash

 

(1,295

)

 

 

(1,010

)

 

 

(1,366

)

 

 

(3,309

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(121,335

)

 

 

12,194

 

 

 

(101,047

)

 

 

(3,085

)

Cash, cash equivalents and restricted cash—beginning of period

 

221,882

 

 

 

477,479

 

 

 

201,594

 

 

 

492,758

 

Cash, cash equivalents and restricted cash—end of period

$

100,547

 

 

$

489,673

 

 

$

100,547

 

 

$

489,673

 

Reconciliation of GAAP measures to non-GAAP measures
(unaudited)

The following table reconciles our GAAP gross profit to non-GAAP gross profit (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Gross profit

$

81,122

 

 

$

75,954

 

 

$

234,887

 

 

$

214,219

 

Amortization of acquired intangibles

 

1,980

 

 

 

2,790

 

 

 

6,530

 

 

 

9,055

 

Stock-based compensation

 

1,285

 

 

 

1,978

 

 

 

4,757

 

 

 

4,276

 

2022 Strategic Realignment

 

125

 

 

 

259

 

 

 

790

 

 

 

694

 

Non-GAAP gross profit

$

84,512

 

 

$

80,981

 

 

$

246,964

 

 

$

228,244

 

The following table reconciles our GAAP gross margin to non-GAAP gross margin(1):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Gross margin

 

71.0

%

 

 

68.2

%

 

 

70.5

%

 

 

68.1

%

Amortization of acquired intangibles margin

 

1.7

%

 

 

2.5

%

 

 

2.0

%

 

 

2.9

%

Stock-based compensation margin

 

1.1

%

 

 

1.8

%

 

 

1.4

%

 

 

1.4

%

2022 Strategic Realignment margin

 

0.1

%

 

 

0.2

%

 

 

0.2

%

 

 

0.2

%

Non-GAAP gross margin

 

74.0

%

 

 

72.7

%

 

 

74.2

%

 

 

72.5

%

(1) Columns may not add up due to rounding.

The following table reconciles our GAAP operating loss to non-GAAP operating income (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating loss

$

(12,742

)

 

$

(19,197

)

 

$

(43,565

)

 

$

(74,456

)

Amortization of acquired intangibles

 

8,979

 

 

 

10,328

 

 

 

27,988

 

 

 

33,128

 

Stock-based compensation

 

8,598

 

 

 

17,407

 

 

 

38,177

 

 

 

39,702

 

2022 Strategic Realignment

 

5,732

 

 

 

1,224

 

 

 

10,736

 

 

 

10,818

 

Anvil legal dispute accrual

 

8,064

 

 

 

 

 

 

8,064

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

 

 

 

(57

)

Non-GAAP operating income

$

18,631

 

 

$

9,762

 

 

$

41,400

 

 

$

9,135

 

The following table reconciles our GAAP net income (loss) to non-GAAP net income (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

$

1,683

 

 

$

(22,080

)

 

$

(28,015

)

 

$

(77,335

)

Amortization of acquired intangibles

 

8,979

 

 

 

10,328

 

 

 

27,988

 

 

 

33,128

 

Stock-based compensation

 

8,598

 

 

 

17,407

 

 

 

38,177

 

 

 

39,702

 

2022 Strategic Realignment

 

5,714

 

 

 

1,227

 

 

 

10,718

 

 

 

10,821

 

Anvil legal dispute accrual

 

8,064

 

 

 

 

 

 

8,064

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

 

 

 

(57

)

Accretion of interest on convertible senior notes

 

684

 

 

 

1,168

 

 

 

2,122

 

 

 

3,492

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value

 

(12,658

)

 

 

4,770

 

 

 

(12,658

)

 

 

4,770

 

Income tax adjustments

 

(841

)

 

 

(510

)

 

 

(1,918

)

 

 

(1,321

)

Non-GAAP net income

$

20,223

 

 

$

12,310

 

 

$

44,478

 

 

$

13,200

 

Reconciliation of GAAP measures to non-GAAP measures (Continued)
(unaudited)

The following table reconciles our GAAP net income (loss) per basic share to non-GAAP net income per basic share(1):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss) per basic share(a)

$

0.04

 

 

$

(0.56

)

 

$

(0.69

)

 

$

(1.95

)

Amortization of acquired intangibles per basic share(b)

 

0.22

 

 

 

0.26

 

 

 

0.69

 

 

 

0.84

 

Stock-based compensation per basic share(b)

 

0.21

 

 

 

0.44

 

 

 

0.94

 

 

 

1.00

 

2022 Strategic Realignment per basic share(b)

 

0.14

 

 

 

0.03

 

 

 

0.26

 

 

 

0.27

 

Anvil legal dispute accrual(b)

 

0.20

 

 

 

 

 

 

0.20

 

 

 

 

Change in fair value of contingent consideration per basic share(b)

 

 

 

 

 

 

 

 

 

 

 

Accretion of interest on convertible senior notes per basic share(b)

 

0.02

 

 

 

0.03

 

 

 

0.05

 

 

 

0.09

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value per basic share(b)

 

(0.31

)

 

 

0.12

 

 

 

(0.31

)

 

 

0.12

 

Income tax adjustments per basic share(b)

 

(0.02

)

 

 

(0.01

)

 

 

(0.05

)

 

 

(0.03

)

Non-GAAP net income per basic share(b)

$

0.50

 

 

$

0.31

 

 

$

1.10

 

 

$

0.33

 

(1) Amounts may not add up due to rounding.

The following table reconciles our GAAP net loss per diluted share to non-GAAP net income per diluted share(1):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net loss per diluted share(a)

$

(0.23

)

 

$

(0.56

)

 

$

(0.87

)

 

$

(1.95

)

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangibles per diluted share(b)

 

0.20

 

 

 

0.22

 

 

 

0.64

 

 

 

0.72

 

Stock-based compensation per diluted share(b)

 

0.20

 

 

 

0.38

 

 

 

0.87

 

 

 

0.86

 

2022 Strategic Realignment per diluted share(b)

 

0.13

 

 

 

0.03

 

 

 

0.24

 

 

 

0.24

 

Anvil legal dispute accrual(b)

 

0.18

 

 

 

 

 

 

0.18

 

 

 

 

Change in fair value of contingent consideration per diluted share(b)

 

 

 

 

 

 

 

 

 

 

 

Accretion of interest on convertible senior notes per diluted share(b)

 

0.02

 

 

 

0.03

 

 

 

0.05

 

 

 

0.08

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value per basic share(b)

 

(0.29

)

 

 

0.10

 

 

 

(0.29

)

 

 

0.10

 

Income tax adjustments per diluted share(b)

 

(0.02

)

 

 

(0.01

)

 

 

(0.04

)

 

 

(0.03

)

Non-GAAP net income per diluted share(b)

$

0.46

 

 

$

0.27

 

 

$

1.01

 

 

$

0.29

 

(1) Amounts may not add up due to differences in GAAP and non-GAAP net income (loss) and diluted shares.

(a) GAAP weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40,782,696

 

 

 

39,746,242

 

 

 

40,537,922

 

 

 

39,583,684

 

Diluted

 

43,844,334

 

 

 

39,746,242

 

 

 

43,734,429

 

 

 

39,583,684

 

(b) Non-GAAP weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

40,782,696

 

 

 

39,746,242

 

 

 

40,537,922

 

 

 

39,583,684

 

Diluted

 

44,007,708

 

 

 

46,061,330

 

 

 

43,907,925

 

 

 

45,957,546

 

GAAP and Non-GAAP diluted weighted-average shares include dilutive potential common shares related to convertible notes and stock-based compensation grants.

The following tables reconcile our net income (loss) to EBITDA and adjusted EBITDA, net cash provided by operating activities to free cash flow and adjusted free cash flow and net income (loss) margin to EBITDA and adjusted EBITDA margin (dollars in thousands):

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

$

1,683

 

 

$

(22,080

)

 

$

(28,015

)

 

$

(77,335

)

Interest and investment expense, net

 

(1,416

)

 

 

(742

)

 

 

(3,904

)

 

 

1,124

 

Provision for (benefit from) income taxes

 

(924

)

 

 

25

 

 

 

1,185

 

 

 

(1,754

)

Depreciation and amortization

 

14,630

 

 

 

14,562

 

 

 

44,288

 

 

 

45,253

 

EBITDA

 

13,973

 

 

 

(8,235

)

 

 

13,554

 

 

 

(32,712

)

Stock-based compensation

 

8,598

 

 

 

17,407

 

 

 

38,177

 

 

 

39,702

 

2022 Strategic Realignment

 

5,714

 

 

 

1,227

 

 

 

10,718

 

 

 

10,821

 

Anvil legal dispute accrual

 

8,064

 

 

 

 

 

 

8,064

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

 

 

 

(57

)

(Gain) loss on extinguishment of debt, capped call modification and change in fair value

 

(12,658

)

 

 

4,770

 

 

 

(12,658

)

 

 

4,770

 

Adjusted EBITDA

$

23,691

 

 

$

15,169

 

 

$

57,855

 

 

$

22,524

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

$

17,009

 

 

$

18,035

 

 

$

42,954

 

 

$

15,813

 

Capital expenditures

 

(1,945

)

 

 

(225

)

 

 

(4,124

)

 

 

(2,951

)

Capitalized software development costs

 

(4,835

)

 

 

(4,173

)

 

 

(12,704

)

 

 

(11,609

)

Free cash flow

 

10,229

 

 

 

13,637

 

 

 

26,126

 

 

 

1,253

 

Cash payments for 2022 Strategic Realignment

 

5,269

 

 

 

1,760

 

 

 

10,951

 

 

 

8,079

 

Adjusted free cash flow

$

15,498

 

 

$

15,397

 

 

$

37,077

 

 

$

9,332

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) margin

 

1.5

%

 

 

(19.8

)%

 

 

(8.4

)%

 

 

(24.6

)%

Interest and investment expense, net margin

 

(1.2

)%

 

 

(0.7

)%

 

 

(1.2

)%

 

 

0.4

%

Provision for (benefit from) income taxes margin

 

(0.8

)%

 

 

0.0

%

 

 

0.4

%

 

 

(0.6

)%

Depreciation and amortization margin

 

12.8

%

 

 

13.1

%

 

 

13.3

%

 

 

14.4

%

EBITDA margin

 

12.2

%

 

 

(7.4

)%

 

 

4.1

%

 

 

(10.4

)%

Stock-based compensation margin

 

7.5

%

 

 

15.6

%

 

 

11.5

%

 

 

12.6

%

2022 Strategic Realignment margin

 

5.0

%

 

 

1.1

%

 

 

3.2

%

 

 

3.4

%

Anvil legal dispute accrual margin

 

7.1

%

 

 

 

 

 

2.4

%

 

 

 

Change in fair value of contingent consideration margin

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value margin

 

(11.1

)%

 

 

4.3

%

 

 

(3.8

)%

 

 

1.5

%

Adjusted EBITDA margin

 

20.7

%

 

 

13.6

%

 

 

17.4

%

 

 

7.2

%

Remaining Performance Obligations as of September 30, 2023
(in millions)

 

 

Remaining Performance Obligations

 

 

Remaining Performance Obligations
Next Twelve Months

 

Subscription and other contracts

$

472

 

 

$

291

 

Professional services contracts

 

9

 

 

 

9

 

Financial Outlook
(in millions, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

 

Three Months Ended

 

 

Year Ended

 

 

December 31, 2023

 

 

December 31, 2023

 

 

December 31, 2023

 

 

Issued August 8, 2023

 

 

Low End

 

 

High End

 

 

Low End

 

 

High End

 

 

Low End

 

 

High End

 

Net loss

$

(6.3

)

 

$

(5.1

)

 

$

(34.3

)

 

$

(33.1

)

 

$

(43.7

)

 

$

(41.7

)

Amortization of acquired intangibles

 

9.1

 

 

 

9.1

 

 

 

37.1

 

 

 

37.1

 

 

 

38.0

 

 

 

38.0

 

Accretion of interest on convertible senior notes

 

0.9

 

 

 

0.9

 

 

 

3.0

 

 

 

3.0

 

 

 

3.3

 

 

 

3.3

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value

 

 

 

 

 

 

 

(12.7

)

 

 

(12.7

)

 

 

 

 

 

 

Anvil legal dispute accrual

 

 

 

 

 

 

 

8.1

 

 

 

8.1

 

 

 

 

 

 

 

2022 Strategic Realignment

 

4.0

 

 

 

4.3

 

 

 

14.7

 

 

 

15.0

 

 

 

11.2

 

 

 

11.2

 

Stock-based compensation

 

14.4

 

 

 

14.4

 

 

 

52.6

 

 

 

52.6

 

 

 

58.8

 

 

 

58.8

 

Income tax adjustments

 

(0.6

)

 

 

(0.6

)

 

 

(2.5

)

 

 

(2.5

)

 

 

(1.8

)

 

 

(1.8

)

Non-GAAP net income

$

21.5

 

 

$

23.0

 

 

$

66.0

 

 

$

67.5

 

 

$

65.8

 

 

$

67.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

41,100,000

 

 

 

41,100,000

 

 

 

40,700,000

 

 

 

40,700,000

 

 

 

40,750,000

 

 

 

40,750,000

 

Diluted

 

44,400,000

 

 

 

44,400,000

 

 

 

44,500,000

 

 

 

44,500,000

 

 

 

44,500,000

 

 

 

44,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

$

(0.15

)

 

$

(0.12

)

 

$

(0.84

)

 

$

(0.81

)

 

$

(1.07

)

 

$

(1.02

)

Non-GAAP net income per share

$

0.48

 

 

$

0.52

 

 

$

1.48

 

 

$

1.52

 

 

$

1.48

 

 

$

1.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(6.3

)

 

$

(5.1

)

 

$

(34.3

)

 

$

(33.1

)

 

$

(43.7

)

 

$

(41.7

)

Interest expense, net

 

(1.3

)

 

 

(1.3

)

 

 

(5.2

)

 

 

(5.2

)

 

 

(5.1

)

 

 

(5.1

)

Income taxes, net

 

1.4

 

 

 

1.4

 

 

 

2.6

 

 

 

2.6

 

 

 

5.0

 

 

 

5.0

 

Depreciation and amortization

 

13.4

 

 

 

13.4

 

 

 

57.7

 

 

 

57.7

 

 

 

57.8

 

 

 

57.8

 

EBITDA

 

7.2

 

 

 

8.4

 

 

 

20.8

 

 

 

22.0

 

 

 

14.0

 

 

 

16.0

 

(Gain) loss on extinguishment of debt, capped call modification and change in fair value

 

 

 

 

 

 

 

(12.7

)

 

 

(12.7

)

 

 

 

 

 

 

Anvil legal dispute accrual

 

 

 

 

 

 

 

8.1

 

 

 

8.1

 

 

 

 

 

 

 

2022 Strategic Realignment

 

4.0

 

 

 

4.3

 

 

 

14.7

 

 

 

15.0

 

 

 

11.2

 

 

 

11.2

 

Stock-based compensation

 

14.4

 

 

 

14.4

 

 

 

52.6

 

 

 

52.6

 

 

 

58.8

 

 

 

58.8

 

Adjusted EBITDA

$

25.6

 

 

$

27.1

 

 

$

83.5

 

 

$

85.0

 

 

$

84.0

 

 

$

86.0

 

Reconciliation of Basic and Diluted Net Income (Loss) per Share
The following table summarizes the computations of basic net income (loss) per share and diluted net loss per share (in thousands, except share and per share data):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income (loss)

$

1,683

 

 

$

(22,080

)

 

$

(28,015

)

 

$

(77,335

)

Dilutive effect of convertible notes, net of tax

 

(11,611

)

 

 

 

 

 

(10,132

)

 

 

 

Adjusted net loss

$

(9,928

)

 

$

(22,080

)

 

$

(38,147

)

 

$

(77,335

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common stock outstanding — basic

 

40,782,696

 

 

 

39,746,242

 

 

 

40,537,922

 

 

 

39,583,684

 

Dilutive potential common shares related to convertible notes

 

3,061,638

 

 

 

 

 

 

3,196,507

 

 

 

 

Weighted-average common stock outstanding — diluted

 

43,844,334

 

 

 

39,746,242

 

 

 

43,734,429

 

 

 

39,583,684

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

$

0.04

 

 

$

(0.56

)

 

$

(0.69

)

 

$

(1.95

)

Diluted net loss per share

$

(0.23

)

 

$

(0.56

)

 

$

(0.87

)

 

$

(1.95

)

 

Contacts

Everbridge Contacts:

Investors:
Nandan Amladi
Investor Relations
nandan.amladi@everbridge.com
617-665-7197

Media:
Jeff Young
Media Relations
jeff.young@everbridge.com
781-859-4116

Contacts

Everbridge Contacts:

Investors:
Nandan Amladi
Investor Relations
nandan.amladi@everbridge.com
617-665-7197

Media:
Jeff Young
Media Relations
jeff.young@everbridge.com
781-859-4116