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Everbridge: Too Many Problems Under The Surface

Jun. 11, 2020 4:30 AM ETEverbridge, Inc. (EVBG)6 Comments


  • Beneath its strong momentum a very different reality emerges.
  • This SaaS business's growth rates are being bolstered by consistent and increasing acquisitions.
  • Even though 20x sales is the going rate for a SaaS business, Everbridge is not like other SaaS businesses. Investors should be careful here.
  • Looking for a helping hand in the market? Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Get started today »

Investment Thesis

Everbridge (NASDAQ:EVBG) is everything an investor wishes for: high and stable revenue growth, steadily increasing share price, while its shares swap hands at 20 times multiple.

However, underneath its revenue line, I demonstrate just how inorganic its revenues actually are. And demonstrate that it will be very difficult to grasp what its profit margin profile could ultimately transpire to be.

Having said that, for now, in 2020, momentum is all that matters. And this stock is highly likely to continue to trade higher, notwithstanding its underlying bubbling problems.


Growth Rates Are Stable -- On The Surface

Everbridge is a critical event management SaaS, not too dissimilar from PagerDuty (PD).

For now, all that investors demand are stable, predictable, and strong revenue growth rates from their most endeared SaaS business. On this front, Everbridge doesn't disappoint:

Source: author's calculations, *** 2020 guidance

You can see just how stable its top-line growth rates are. Very consistently hitting higher than 30%, and in this market, investors will give these companies a very wide pass without asking much in the way of critical questions. Indeed, looking over on SA's premium tools, one can see that Wall Street analysts are simply euphoric.

Further, before getting into some critical aspects, I wish to note one further positive and reassuring aspect for investors to be optimistic about Everbridge.

Positive Note: Balance Sheet is Strong

The most positive aspect by far is that its balance sheet is very flexible. With close to $500 million of gross cash, it has plenty of maneuverability. Even if this is offset by the $450 million (total unamortized) convertibles. Altogether, this implies a large runway ahead.

Now For A Dose of Reality

To declare that Everbridge is barely organically profitable wouldn't even cause frustration with readers, by now accustomed to the narrative

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This article was written by

Michael Wiggins De Oliveira is an energy specialist whose primary focus is capitalizing on “the Great Energy Transition” - the confluence of decarbonization, digitalization with AI, and deglobalization - to achieve greater investment returns. Through his 9+ years analyzing countless companies, Michael has accumulated outstanding professional experience in the energy sector and a following of over 40K on Seeking Alpha.

Michael is the leader of the investing group Deep Value Returns. Features of the group include: Insights through his concentrated portfolio of value stocks, timely updates on stock picks, a weekly webinar for live advice, and "hand-holding" as-needed for new and experienced investors alike. Deep Value Returns also has an active, vibrant, and kind community easily accessible via chat. Learn more.

Analyst’s 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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Comments (6)

The TAM is still fairly large - CEM one of the largest TAM's out there. Market doesnt have any issue with acquisitions, provided it augments organic growth(in this case it does) - as we see growth is largely being maintained.
Interesting and thanks for the article. One area not covered in the article is whether it's a "covid stock" or not. Given the nature of the company's service (critical event management and communications), wouldn't you expect a surge in demand from companies and governments trying to coordinate during the pandemic?
Good job digging in. This is the kind of insight I like to see more of on SA and less cheerleading or doomsday articles.
HardytheTrader profile picture
Thanks for sharing your POV. As usual our views don't align. I believe you are missing some bright spots for $EVBG.
Look at the guidance. The company is guiding for FY20 Non-GAAP EPS of $(0,19)-$(0,16). If you compare this with expected EPS of Q1 and Q2 one has to figure out that the company pushes to profitability real quick in the latter half of the year.
Lots of upward EPS revisions are yet to come putting a strong floor under the current share price

Michael Wiggins De Oliveira profile picture
OKay. And I respect your point of view. But I don't see people pricing this stock off EPS. It is not an EPS story, what-so-ever.

But hopefully, I'm wrong. I hope it works out for you. Good luck @HardytheTrader
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