Everbridge, Inc.

Third-quarter revenue was $114.2 million, up 3% year over year. Subscription revenue was $104.3 million, up 8%, while non-subscription revenue was $9.8 million, down 32%. GAAP gross margin was 71% versus 68% a year ago, and adjusted gross margin was 74% versus 73%. GAAP net income was nearly $2 million, or negative $0.23 per diluted share, versus a net loss of $22 million, or negative $0.56 per share, a year ago. Non-GAAP net income was $20 million, or $0.46 per diluted share, versus $12 million, or $0.27 per share, and adjusted EBITDA was $23.7 million, up from $15.2 million, with a 21% margin versus 14%. For Q4, Everbridge guided to revenue of $114 million to $115.5 million, GAAP net loss of $6.3 million to $5.1 million, non-GAAP EPS of $0.48 to $0.52, and adjusted EBITDA of $25.6 million to $27.1 million. Full-year 2023 guidance was reduced to revenue of $447 million to $448.5 million, subscription revenue of $409.5 million to $409.9 million, non-subscription revenue of $37.5 million to $38.6 million, non-GAAP EPS of $1.48 to $1.52, and adjusted EBITDA of $83.5 million to $85 million; management said 2024 adjusted EBITDA should grow roughly 25%.

David Wagner framed the quarter as evidence that Everbridge is shifting toward a more recurring, efficient business model. He highlighted improved pipeline, higher sales productivity, larger average deal sizes, and Q3 as the best bookings quarter of the year, while emphasizing that the company is seeing demand tied to real-world events like heat waves, wildfires, hurricanes, and geopolitical unrest. His tone was constructive and confident, but he repeatedly noted that the ARR growth rate should improve later, not immediately, because of tougher comparisons and the timing of recurring bookings.

Patrick Brickley emphasized profitability improvement and balance-sheet flexibility. He cited ARR of $399 million, revenue of $114.2 million, gross margin of 71%, adjusted gross margin of 74%, adjusted EBITDA of $23.7 million, and adjusted free cash flow of $15.5 million, and he noted year-to-date adjusted free cash flow has increased nearly 300% year over year. He also said Everbridge ended Q3 with $100.5 million in cash, had used roughly $130 million to repurchase $145 million of convertible debt, and reduced net debt to $263 million, down 22% year over year. On guidance, he pointed to lower non-subscription revenue, the revised full-year outlook, and said the company expects roughly 25% adjusted EBITDA growth in 2024 from the existing cost structure.

Analysts focused on why bookings improved while ARR additions were still modest, and management said the gap was mainly due to renewal contraction and the decline in one-time revenue. Questions also centered on the higher renewal contraction; management said it was largely isolated to Q3 and driven mostly by headcount reductions, some service contraction, and budget pressure, not a broader deterioration in retention. Another area of focus was product migration: management said RC9 migration is progressing, feature parity will be done in Q1, and the end-of-life motion will come before then, while CEM conversions remain a mix of new customers and upgrades. Analysts also pressed on the delay in on-premise deals, and management said those are nationally approved projects that simply take time to close, with some pushed into 2024.