Everbridge: Impressive Growth, But We're Bearish On Valuation

Mar. 04, 2020 1:21 PM ETEverbridge, Inc. (EVBG)1 Comment


  • Everbridge reported Q4 earnings which beat expectations, highlighted by an impressive 36% year over year revenue growth.
  • The company is benefiting from greater adoption among organizations utilizing its critical event management suite.
  • Recognizing the positive sentiment and strong operational momentum, we see valuation as a headwind for the stock price as valuation appears aggressive.
  • This idea was discussed in more depth with members of my private investing community, Core-Satellite Dossier. Get started today »

Everbridge, Inc. (NASDAQ:NASDAQ:EVBG) provides an enterprise-level software solution to detect and respond to critical events including IT outages, supply chain disruptions, severe weather, and public safety threats. The company is capitalizing on the Coronavirus outbreak by highlighting the capabilities of its critical event management suite. The company has benefited in recent years from a theme among global corporations recognizing the importance of IT security, internal controls, and compliance-regulations protocols. While recognizing several positive trends, we take a more cautious outlook on valuation as the stock trades at an increasingly aggressive premium.

(source: finviz.com)

Q4 Earnings Recap

Everbridge last reported its Q4 earnings on February 19th with Non-GAAP EPS of $0.05 which was $0.01 ahead of expectations. A GAAP EPS loss of $0.39 was also $0.06 better than the market estimate. The spread here between GAAP and the adjusted measure is based on the amortization of intangibles and stock-based compensation of executives. For the full year, the non-GAAP EPS loss was $0.21.

More importantly, the story is exceptional top-line growth. Revenue in the quarter at $57.1 million represented an increase of 36.6% y/y and slightly above estimates. The gross margin of the business is steady around 68%, highlighting the favorable economics of the core service product. The revenue mix has been consistent with 59% from corporate clients, 29% from government agencies, and 12% from healthcare.

(source: Company IR)

For 2019, the adjusted EBITDA, which excludes stock-based compensation, was positive at $5.7 million compared to negative $2.7 million in 2019. Operating expenses were driven by higher SG&A along with continued R&D investments.

The company now has 5,024 enterprise clients, adding 173 in the last quarter. While many of these clients have one or two specific products, the company sees its integrated Critical Event Management 'CEM' suite as the growth driver. These deals are potentially worth millions of dollars

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This article was written by

Dan Victor, CFA profile picture
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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