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EI

EVERBRIDGE, INC. (EVBG)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 delivered modest top-line growth with revenue of $114.2M (+3% YoY) and a return to GAAP profitability ($1.7M), while non-GAAP results showed strong margin expansion; subscription revenue grew 8% YoY, offset by continued weakness in one-time services and perpetual licenses .
  • Actuals outperformed prior Q3 guidance on multiple lines: revenue modestly exceeded the prior guidance high of $114.0M and non-GAAP net income surpassed the $18.5–$19.0M range to $20.2M; adjusted EBITDA rose to $23.7M versus Q2’s $18.3M, reflecting disciplined cost management and subscription strength .
  • FY 2023 revenue guidance was lowered to $447.0–$448.5M (from $450.0–$452.0M), while adjusted EBITDA was trimmed to $83.5–$85.0M (from $84.0–$86.0M); management reiterated profitability improvement into Q4 and 2024 driven by subscription momentum and expense discipline .
  • Key catalyst: clear narrative shift toward profitability and ARR/CEM growth amid headwinds in one-time revenue; product innovation (Everbridge 360) and public warning wins underpin medium-term positioning, with management targeting “Rule of 40” by 2027 .

What Went Well and What Went Wrong

What Went Well

  • Strong recurring momentum: subscription revenue $104.3M (+8% YoY); ARR reached $399M (+8% YoY), with CEM customers rising to 405 (+32 sequential, +59% YoY), underpinning durability of the core model .
  • Material non-GAAP margin expansion: adjusted EBITDA increased to $23.7M (vs. $15.2M in Q3’22) and non-GAAP operating income rose to $18.6M (vs. $9.8M in Q3’22), reflecting cost discipline and streamlined product portfolio .
  • Management tone on execution: “We delivered solid third quarter results… strongest recurring bookings quarter of the year” — David Wagner, CEO; “Our improving profitability is supported by continued strength in our subscription revenue growth…” — Patrick Brickley, CFO .

What Went Wrong

  • Ongoing one-time revenue headwinds: professional services, software licenses and other fell to $9.8M (-33% YoY), weighing on total revenue growth despite subscription strength .
  • FY revenue guidance lowered: current FY 2023 revenue guided to $447.0–$448.5M versus prior $450.0–$452.0M; adjusted EBITDA trimmed to $83.5–$85.0M (prior $84.0–$86.0M) .
  • Q4 one-time revenue caution: management expects one-time revenues to decrease by about $6M vs. Q4 2022, limiting near-term total revenue trajectory despite stable subscription growth .

Financial Results

Consolidated Performance (Q1–Q3 2023)

MetricQ1 2023Q2 2023Q3 2023
Revenue ($USD Millions)$108.268 $110.569 $114.191
GAAP Diluted EPS ($USD)$(0.36) $(0.37) $(0.23)
Non-GAAP Diluted EPS ($USD)$0.25 $0.31 $0.46
Gross Margin (%)70.46% 70.07% 71.04%
Adjusted EBITDA ($USD Millions)$15.853 $18.311 $23.691
Cash from Operations ($USD Millions)$20.575 $5.370 $17.009

Year-over-Year Growth Rates (as disclosed)

MetricQ1 2023Q2 2023Q3 2023
Revenue YoY (%)+8% +7% +3%
Subscription Revenue YoY (%)—+8% +8%

Segment/Source Breakdown (Q3 2023)

Revenue Source ($USD Millions)Q3 2023
Subscription Services$104.3
Professional Services, Software Licenses and Other$9.8

KPI Trajectory (Q1–Q3 2023)

KPIQ1 2023Q2 2023Q3 2023
ARR ($USD Millions)$388 $395 $399
CEM Customer Count335 373 405
Remaining Performance Obligations (Total, $M)$485 $479 $472
RPO – Next Twelve Months ($M)$298 $290 $291
Adjusted Free Cash Flow ($M)$20.009 $1.570 $15.498

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2023$450.0–$452.0 $447.0–$448.5 Lowered
Adjusted EBITDA ($M)FY 2023$84.0–$86.0 $83.5–$85.0 Lowered
GAAP Net Loss ($M)FY 2023$(43.7)–$(41.7) $(34.3)–$(33.1) Improved (less loss)
Non-GAAP Net Income ($M)FY 2023$65.8–$67.8 $66.0–$67.5 Maintained/Slightly raised
Non-GAAP EPS ($)FY 2023$1.48–$1.52 $1.48–$1.52 Maintained
Revenue ($M)Q4 2023N/A$114.0–$115.5 New
Adjusted EBITDA ($M)Q4 2023N/A$25.6–$27.1 New
GAAP Net Loss ($M)Q4 2023N/A$(6.3)–$(5.1) New
Non-GAAP Net Income ($M)Q4 2023N/A$21.5–$23.0 New
Non-GAAP EPS ($)Q4 2023N/A$0.48–$0.52 New
Disaggregated Revenue (Q4 2023)Subscription ($M)$101.4 (Q4’22 actual) $104.6–$105.0 Raised vs Q4’22
Disaggregated Revenue (Q4 2023)Professional Services ($M)$8.7 (Q4’22 actual) $6.7–$7.1 Lower vs Q4’22
Disaggregated Revenue (Q4 2023)Software Licenses & Other ($M)$7.0 (Q4’22 actual) $2.7–$3.4 Lower vs Q4’22

Management also cautioned that one-time revenues are expected to decrease by about $6M in Q4 vs Q4 2022 .

Earnings Call Themes & Trends

TopicQ1 2023 (Prev Mentions)Q2 2023 (Prev Mentions)Q3 2023 (Current)Trend
Subscription/ARR momentumARR $388M; focus on retention and profitability ARR $395M; subscription revenue +8% YoY ARR $399M; subscription revenue $104.3M (+8% YoY) Improving, consistent growth
One-time revenue headwinds—Booking large/perpetual contracts facing headwinds Professional services/licenses down 33% YoY; further Q4 pressure Deteriorating one-time
Cost discipline & marginsAdjusted EBITDA $15.9M; margin expansion begins Adjusted EBITDA $18.3M; continued margin expansion Adjusted EBITDA $23.7M; non-GAAP op income $18.6M Strengthening
Product innovation & AIBrand evolution; public warning deployments (EU) Expanded AI partnership (Samdesk) Everbridge 360 launch; new AI patent; AI in public warning demo Advancing
Public warning winsMultiple country deployments (EU) Trinidad & Tobago; UN/ITU engagement Germany nationwide day execution; Glendale, AZ deployment Broadening footprint
FY guidance stanceFY 2023 guide reaffirmed in Q1 FY guidance updated; cautious on one-time revenue FY revenue lowered; profitability guides steady/improved Mixed: revenue down, margins up

Management Commentary

  • David Wagner, President & CEO: “We delivered solid third quarter results as we continue to improve our go-to-market execution and overall operating efficiency… strongest recurring bookings quarter of the year… increase adjusted EBITDA by $8.5 million in the third quarter compared to last year” .
  • Patrick Brickley, CFO: “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… we expect to further improve our earnings while… our one-time revenues are now expected to decrease by about $6 million compared to the fourth quarter of 2022” .
  • Strategic outlook: “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… on track towards… ‘Rule of 40’ by 2027” — David Wagner .

Q&A Highlights

  • Q3 2023 earnings call transcript could not be retrieved due to a document access error in the source database; as a result, prepared remarks and Q&A specifics are unavailable for extraction in this report .
  • Guidance clarifications were presented in the press release: FY 2023 revenue lowered; adjusted EBITDA narrowed; explicit Q4 disaggregated revenue ranges provided; one-time revenue expected to decline materially vs Q4 2022 .

Estimates Context

  • S&P Global consensus estimates were unavailable for EVBG due to a CIQ mapping issue in the estimates data source; therefore, Street comparison is not provided in this recap.
  • Versus company guidance: revenue of $114.191M modestly exceeded the prior Q3 guidance high of $114.0M; non-GAAP net income of $20.223M exceeded the prior $18.5–$19.0M range; adjusted EBITDA of $23.691M exceeded the prior $23.0–$23.5M guide, indicating operational outperformance relative to company expectations .

Key Takeaways for Investors

  • Recurring engine intact: subscription revenue growth (+8% YoY) and rising ARR/CEM customers highlight durable demand in the core CEM platform, supporting continued margin expansion .
  • Mix shift matters: persistent one-time revenue declines (-33% YoY in Q3; expected ~$6M lower in Q4 vs Q4’22) cap near-term total revenue growth; this dynamic informs the lowered FY revenue guide .
  • Profitability trajectory improving: non-GAAP operating income and adjusted EBITDA stepped up sequentially, with gross margin ticking higher; FY GAAP net loss guidance improved meaningfully, signaling continued cost discipline .
  • Execution and product roadmap: Everbridge 360 launch and AI-related IP demonstrate ongoing innovation; public warning deployments (e.g., Germany, Glendale AZ) reinforce government traction and strategic relevance .
  • Near-term trading lens: the quarter modestly beat company guidance on key metrics; the lowered FY revenue guide may temper top-line expectations, while margin expansion and cash generation provide a counterbalancing positive .
  • Medium-term thesis: subscription-led growth, operational efficiency, and product focus underpin management’s path to improved profitability into 2024 and “Rule of 40” by 2027; watch sustainability of ARR growth and stabilization in one-time revenues .
  • Risk monitors: perpetual license softness, macro procurement cycles for large deals, and execution on public sector expansions; track Q4 mix and FY margin outcomes against updated guidance ranges .