What Happened:
Shares of critical event management software company Everbridge (NASDAQ:EVBG) jumped 18.6% in the pre-market session after the company announced it has agreed to be acquired by private equity firm Thoma Bravo for $1.5 Billion. The deal is expected to "accelerate the company's growth."
"Over the last several years, we have expanded and evolved our business to support customers in an increasingly complex threat landscape. Thoma Bravo's comprehensive experience in the risk, compliance, and safety sectors and commitment to fostering innovation will enable us to better help our customers keep people safe and their organizations running..." said David Wagner, President and CEO of Everbridge.
Under the terms of the agreement, Everbridge shareholders will receive $28.60 per share in cash. The purchase price represents a 32% premium to the Everbridge volume-weighted average share price over the last 90 days and an 18% premium over the closing price on Friday, February 2, 2024.
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What is the market telling us:
Everbridge's shares are very volatile and over the last year have had 17 moves greater than 5%. But moves this big are very rare even for Everbridge and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock dropped 18.7% on the news that the company reported second-quarter earnings in which it lowered full-year revenue guidance and missed analysts' expectations. Additionally, next quarter's revenue guidance also missed Wall Street's expectations.
Management touched on some of the factors influencing the reduced guidance, noting that "However, we also continue to experience headwinds booking large and especially perpetual revenue contracts. This dynamic is reflected in our updated revenue guidance for the second half of 2023."
On the other hand, revenue and non-GAAP operating profit beat expectations slightly during the quarter. Overall, it was a weaker quarter as the reduced outlook was a major negative alongside the issues raised by management.
Everbridge is up 23.8% since the beginning of the year, but at $28.16 per share it is still trading 19.7% below its 52-week high of $35.07 from March 2023. Investors who bought $1,000 worth of Everbridge's shares 5 years ago would now be looking at an investment worth $447.13.
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