Critical event management software company Everbridge (NASDAQ:EVBG) reported Q4 FY2023 results exceeding Wall Street analysts' expectations, with revenue down 1.2% year on year to $115.8 million. It made a non-GAAP profit of $0.47 per share, improving from its profit of $0.39 per share in the same quarter last year.
Everbridge (EVBG) Q4 FY2023 Highlights:
- Revenue: $115.8 million vs analyst estimates of $114.6 million (1% beat)
- EPS (non-GAAP): $0.47 vs analyst expectations of $0.49 (4.5% miss)
- Free Cash Flow of $24.69 million, up 59.3% from the previous quarter
- Gross Margin (GAAP): 71.2%, in line with the same quarter last year
- Market Capitalization: $1.17 billion
- Everbridge has agreed in to be taken private by Thoma Bravo for $28.60 a share in cash ($1.5B in total).
Founded as a reaction to the catastrophic events of 9/11, Everbridge (NASDAQ:EVBG) supplies software that helps governments and businesses keep people and infrastructure safe in emergencies.
From school shootings to storm surges, Everbridge can help organisations automate the initiation of incident response, alert people to threats via their phones, and proactively assess risk levels before critical events emerge. Importantly, the Everbridge private network allows groups of customers to opt in to share data on a confidential basis with each other around specific problems or critical events. This means that Everbridge’s platform becomes more valuable as more organizations use it.
Everbridge gains competitive advantage as more customers anonymously share data with each other, so it’s important that it continues to win more customers. And the more Everbridge is deployed by varied customers, the more data and opportunities it has to help streamline responses, and derive insights about how critical events can be better managed in the future.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
Everbridge has global market penetration but it faces competition from established firms like Juvare, which owns WebEOC, an extremely widely used emergency management software. And there are a plethora of smaller competitors in mass notification, though Everbridge’s cell broadcast and location-based SMS solutions cannot be replicated by all of them.
As you can see below, Everbridge's revenue growth has been unremarkable over the last two years, growing from $102.8 million in Q4 FY2021 to $115.8 million this quarter.
This quarter, Everbridge's revenue was down 1.2% year on year, which might disappointment some shareholders.
What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Everbridge's gross profit margin, an important metric measuring how much money there's left after paying for servers, licenses, technical support, and other necessary running expenses, was 71.2% in Q4.
That means that for every $1 in revenue the company had $0.71 left to spend on developing new products, sales and marketing, and general administrative overhead. Everbridge's gross margin is lower than that of a typical SaaS businesses. Gross margin has a major impact on a company’s ability to develop new products and invest in marketing, which may ultimately determine the winner in a competitive market. This makes it a critical metric to track for the long-term investor.
Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Everbridge's free cash flow came in at $24.69 million in Q4, up 440% year on year.
Everbridge has generated $61.77 million in free cash flow over the last 12 months, a decent 13.8% of revenue. This FCF margin stems from its asset-lite business model and gives it a decent amount of cash to reinvest in its business.
Key Takeaways from Everbridge's Q4 Results
Overall, we think this was a decent quarter. The stock is flat after reporting, as the price is now determined by the likelihood of the take private deal going through rather than fundamentals or market sentiment and currently trades at $28.33 per share.
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