Everbridge Inc (EVBG) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Everbridge second quarter financial results -- to the Everbridge Second Quarter 2017 Financial Results Conference Call. (Operator Instructions)

As a reminder, this call may be recorded, and I would now like to introduce your host for today's conference, Ken Goldman, SVP and CFO. Please begin.

Good afternoon, and welcome to Everbridge's earnings conference call for the second quarter of 2017. This is Ken Goldman, Senior Vice President and Chief Financial Officer of Everbridge. With me on the call today is Jamie Ellertson, CEO and Chairman.

After the market closed today, we issued a press release with details regarding our second quarter results, which can be accessed on the Investor Relations section of our website at ir.everbridge.com.

This call is being recorded and a replay will be available on our IR website following the conclusion of the call.

During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. For further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC included in our recent 10-Q and 10-K filings.

Also during the course of today's call, we will make reference to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release.

Finally, at the times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide these additional details in the future.

With that, let me turn the call over to Jamie for his prepared remarks.

Thanks, Ken, and welcome to all of you joining our second quarter of 2017 earnings call.

This is our fourth earnings call since our IPO last September, and we're excited to have delivered another strong quarter, with both revenue and adjusted EBITDA coming in above our guidance ranges.

Revenue of $25 million increased 35% from a year ago, with strong growth from our core and new products in the form of larger as well as greater numbers of multiproduct transactions than in any previous quarter. And with our balanced approach to revenue growth and profitability, we are able to deliver a substantive sequential improvement in our adjusted EBITDA in parallel with our solid revenue growth.

Our Q2 results reflect the market momentum we continue to see as organizations increasingly recognize the threats that critical events can have on their employees' and citizens' safety and their ability to sustain business operations. Our Critical Event Management solutions help major public and private organizations around the globe during critical events by identifying threats, providing context to take action, motivating standard operating procedures to respond and facilitating communications and collaboration for the employees or citizens to ensure their safety and the continued operations of businesses.

In the second quarter, our growth was driven by new customer additions across our entire suite of Critical Event Management, applications, expanding relationships with existing customers and multiproduct deals.

Our newest products, such as Safety Connection, Community Engagement and IT Alerting, continue to be a meaningful driver of growth, representing 36% of all new and growth sales on a trailing 12-month basis. As new and enhanced solutions beyond our core mass notification applications create both additional entry points for new customers and cross-selling opportunities for existing customers.

By the way, this figure of 36% of new and growth sales does not include revenue from our IDV or Crisis Commander acquisitions, which further contributed to our overall growth in the quarter. And although we are still in the early process of integrating IDV's Visual Command Center or VCC, as I'll often refer to it, into our overall Critical Event Management platform, we did close several new VCC contracts, including some with existing Everbridge customers who continue to voice strong support for our vision.

Now allow me to turn to a few more of our key operational highlights from the second quarter. In the quarter, we added 123 new -- net new customers, which is up from 113 net adds in the first quarter and brings our total customer count to 3,441, an increase of 15% from a year ago. Our growth is also being driven by our increasing average revenue per customer or ASP, with multiproduct deals becoming a meaningful additional dimension of our growth story. In Q2, we closed 60 multiproduct deals compared with 54 last quarter and 45 in the second quarter of 2016, a 33% increase year-over-year.

In addition to closing an increasing number of multiproduct deals, in Q2, those deals also grew substantially in overall size per transaction. In the quarter, we recorded a dozen transactions valued at over $100,000 in annual contract value, almost all of them, multiproduct deals. Examples include Booz Allen Hamilton, Comcast, AEG and Novant Health, just to name a few.

Allow me to provide a little more background on a few of these wins, starting with Booz Allen. This global management consulting organization was looking to integrate their current traveler information with the physical access control system to understand where their over 25,000 consultants were during major events in order to keep people safe and their operations running. The deal included 4 of our products, Mass Notification, Incident Management, Safety Connection and Community Engagement.

Another notable multiple product win for the quarter was AEG. The Anschutz Entertainment Group is the largest owner of sports teams and related events in North America, and they selected our Mass Notification and Incident Management Solutions to provide greater employee connectivity and safety at their over 100 facilities that host thousands of events each year.

And maybe one other multiproduct win example from our healthcare team would be the large new deal with Novant Health, a leading health care provider in the southeast that selected 5 of our solutions from Mass Notification and Safety Connection to help fulfill their enterprise communication needs in their newly formed security operations center.

These examples of large multiproduct deals are important illustrations of our strategy of developing a true platform, which can support multiple applications addressing customer needs across multiple departments for an entire organization is working.

A key component of our strategy involves leveraging the breadth of our platform to address larger customer challenges than our historic core Mass Notification did by itself and in so doing engaging more senior-level sponsorship as they recognize the increasing value and benefit we can deliver with Critical Event Management.

Now turning to our core business. We recorded significant new Mass Notification and Incident Management wins with leading financial institutions, such as RBC and Scotiabank just to our north as well as government organizations like California Department of Social Services, all 3 of which were new 6-figure deals. The California DSS win is particularly significant in that it illustrates a recent trend where government entities are leveraging Everbridge, not just to communicate with their citizens, but also to keep their employees safe and their operations running.

Other notable Mass Notification deals included leading brands like Time, Inc. in publishing, companies like Micro Focus and Shutterstock in tech, organizations such as AARP in the not-for-profit space, TripAdvisor and AAA Michigan in travel, and Beaumont Health System in the healthcare and hospital market. Notably, Beaumont was a 6-figure transaction where we displaced a legacy provider of communication and collaboration solutions.

Our success with newer solutions like IT Alerting and Safety Connection also continued in the quarter, with our IT Alerting solution being selected at leading organizations like Charter Communications. Charter selected Everbridge in a 6-figure enterprise transaction after an extensive evaluation process that focused on solution breadth, scale and delivery assurance as key evaluation criteria. As a result, Charter will benefit from consolidating multiple vendors across multiple IT groups with a unified IT response platform, which will enable additional expansion for us in the future. This broad transaction also reflects the expansion of our IT Alerting use case beyond services operations to now include security operations, development operations, and backup and recovery functions.

Other key wins with our IT Alerting solution included Medtronic Corporation, a current customer that deployed a new implementation of this product to enhance their management of older, more manual IT incident management processes across their entire organization as well as other IT Alerting wins at organizations like Caesars Entertainment Group; NIIT, a global IT solution company; and the Pentagon Federal Credit Union.

Sticking with our newer solutions, let me provide some color around our rapidly growing Safety Connection customer base. In Q2, we saw the number and size of Safety Connection deals continue to grow, both year-over-year and quarter-over-quarter, with new wins in organizations like Altria, formally Philip Morris, who wanted to provide enhanced safety to their thousands of traveling employees and made the decision to purchase Safety Connection Pro in under 30 days.

Another notable Safety Connection win was Dropbox, who heard about Everbridge from other satisfied Bay Area customers. As you know, we got quite a few of those guys, and sought a solution that would integrate with our partner, International SOS for their fast-growing employee base.

Other representatives of Safety Connection wins in the quarter include Airbus global security operations, which expanded their Everbridge relationship with a large six-figure deal as well as Biogen, ICAN and Cosmo Energy, who interestingly enough, expanded their MN product subscription as well as adding Safety Connection in Q2, an example of how we can expand usage of existing products and simultaneously add entire new products to grow customer relationships.

We also saw meaningful new wins for our Community Engagement, Secure Messaging and Crisis Commander Solutions at organizations, such as the City of Philadelphia, Compassionate Care and Boston Consulting Group, respectively.

The newest product in our portfolio Visual Command Center, which you may recall was part of our mid-first quarter acquisition of IDV, also produced very encouraging results in the past quarter. We've just begun to upgrade and integrate VCC into the Everbridge CEM suite of products, which we previously stated will be delivered by the middle of next year. But in this past quarter, ahead of expectations, we witnessed a very positive market response to VCC, especially at our Everbridge existing customer base, with new VCC wins at one of the world's largest social media companies as well as one of the largest enterprise software companies.

The enterprise software win was notable because we had just closed a new six-figure Mass Notification deal with this company in Q1 after a several month negotiation for a new Master Services Agreement, which we were then able to turn around and leverage for a six-figure VCC win that took only 30 days to negotiate, start to finish. Not only is a reduction in time to close important, but the total annual spend by this organization on 3 products, the MN and IC and VCC now approaches $500,000. That's a 4x increase over the size of the typical enterprise deal and over 10x on our historic Everbridge ASP.

Other key wins for IDV in the quarter included multiple six-figure wins at one of the world's largest cloud providers, one of the largest retailers in North America and one of the largest insurance companies.

We remain very excited about the potential for VCC as a strategic differentiator and a critical component of our CEM suite for global enterprises.

In addition to these new wins, we saw our land-and-expand strategy continue to deliver solid results in the quarter across all focus verticals and geographic markets, including a substantial expansion at leading financial services organization Thomson Reuters, who is concerned with recent major events in both London and New York and sought to expand their provision of care for employees by rolling out our Safety Connection Pro solution, 4 different products, increasing their annual spend by over 50%.

In the health care vertical, existing customers like L.A. County, committed to a 6-figure expense with the rollout of our HipaaBridge and CareConverge application. And again, importantly, L.A. County win reflects the growing clinical use of our product on the operating side of healthcare providers.

In the energy space, NRG moved from a departmental deployment of Mass Notification to a company-wide rollout that displaced a competitive solution for all business continuity and emergency notification.

From a specific end-market perspective, the corporate vertical continues to be our biggest contributor to revenue, followed by government and then healthcare.

Finally, with regard to other geographies, channels and niche verticals, we saw key new wins in growth transactions in Europe with organization such as MSC cruises, where they're deploying MN across their fleet of 12 large cruise ships; and CBRE, the leading commercial property real estate organization, who selected Safety Connection to help them understand where their employees were when a major incident like the Westminster Bridge terrorist attack occurred and whom specifically was affected as well as the continued deployment in one of the world's largest banks, where they expanded their use of Mass Notification; and our Contact Bridge, that's our mobile solution to their roughly 250,000 employees across the globe.

From our channels program, we continue to build momentum with partners like International SOS where we closed new business with organizations like Schlumberger, the world's largest oil field services company, who wanted to replace an old Mass Notification solution with a more tightly integrated communication and traveler solution for their 100,000-plus employees in over 85 countries around the globe and chose the combined Everbridge and International SOS solution in Q2.

And to close out my customer highlights, I'm happy to update you on our continued success in North American transportation, specifically the airport market. With the recent win of Boston Logan Airport, we can now count all top 25 of the busiest airports in the United States as Everbridge customers.

We similarly have a strong position with many of the nation's largest transit systems, airlines, railroads, cruise lines and port authorities, complemented by our use at 8 of the 10 largest cities in the U.S. Our strong position throughout the public infrastructure space is helping us become the standard for transportation as well as major government sectors.

Our technology continues to be used to help customers with many of the most disruptive threats that occurred around the world. An example is the London Bridge attack in June. Within minutes of the incident, our enterprise customers went into action using Everbridge to contact employees and ensure they were safe, leading public organizations like the City of London police or the Cross-sector Safety & Security Communications teams, issued alerts to citizens and local emergency services, and hospitals used the system to coordinate response. From government agency to healthcare organizations to private corporations, Everbridge delivered the communications to provide the critical information necessary to keep people safe.

Turning to product and operations. As I indicated in our last quarter's call, we just deployed our newest core communication engine, further increasing our global scale and robustness. Since launching this new engine, we have reached the significant milestone of sending over 4 billion messages.

Now before I close, let me provide you with some additional background on the important new announcement we made earlier this week about the addition of 2 proven executives to our senior management team.

First, Robert Hughes, who most recently served as President of Worldwide Operations for Akamai Technologies, joined us in the newly created position of President. Many of you may be already familiar with Bob Hughes as a seasoned enterprise technology executive and visionary, spent over 17 years scaling and expanding Akamai's global operations services from under $50 million to over $2 billion. Bob served in Akamai's executive leadership team for more than a decade, most recently overseeing day-to-day global operations and all aspects of the customer experience, including global sales, services, marketing, support and go-to-market strategy.

At Everbridge, Bob will be responsible for the company's go-to-market operations, including sales, marketing, professional services and the customer success efforts.

I'm really excited to have someone with Bob's proven breadth of experience in establishing strategic direction as well as growth execution reporting to me. The entire team and I are eager to leverage Bob's expertise as we scale Everbridge to the next level of growth and success.

In addition to Bob, we also announced that Javier Colado, joined our senior management team as Senior Vice President, International Sales. Most recently, Javier served as President of EMEA operations at Intralinks. Previously, he'd led international growth in EMEA and Asia Pacific at organizations like SAP and McAfee as well as serving as Head of Global Sales at Novell, where we had direct responsibility for over $1 billion in annual revenues.

At Everbridge, Javier, will be based in our London office to lead all international sales, serve as a member of our senior management team, and will report to Bob Hughes.

The combination of these 2 executives will significantly deepen our management team as well as help us continue to expand our leadership position in Critical Event Management.

In summary, our strong second quarter performance illustrates our ability to serve the Critical Event Management market with robust, differentiated solutions.

As we look to future quarters, we expect our growth will continue to be driven by our Mass Notification solution and, increasingly, by our newer applications, including IT Alerting, Safety Connection, Community Engagement and Visual Command Center, all accelerated by an anticipated growing number of multiproduct deals. And over the longer term, we believe increasing demand for our Critical Event Management suite will drive growth and profitability in the years ahead.

Now I'd like to turn the call back over to Ken for specific details of our financial performance during the quarter and our continuing outlook for 2017. Ken?

Thanks, Jamie.

I'll provide some more details on our financial performance for the second quarter, and then provide you with our outlook for the third quarter in the year.

Revenue in the second quarter was $25 million and was above the high end of our guidance range and represented growth of 35% from a year ago. Our better-than-expected top line performance was the primary contributor to producing adjusted EBITDA that was also exceeding our expectations, coming in at a loss of $100,000 compared to a gain of $100,000 a year ago, including the anticipated negative impact of our IDV acquisition, which had impacted our profitability for the quarter.

Our dollar-based net retention rate remains above 110%, reflecting the significant value and satisfaction we provide to our customers.

Now I'd like to turn to the details of our P&L. Unless otherwise indicated, I will be discussing income statement metrics on a non-GAAP basis. A reconciliation of GAAP to non-GAAP measures has been provided in the earnings release we issued earlier today.

Gross profit of $18.3 million increased 36% from a year ago and represented a gross margin of 72.5% compared to 72.7% a year ago but up from 70% in Q1, with the year-over-year decrease mainly due to acquisition accounting. While gross margins can fluctuate from quarter-to-quarter, we expect that over the long term, we can continue to drive gradual improvements as our business scales.

Total operating expenses were $19.7 million in the quarter, increasing 34% from a year ago, reflecting product and infrastructure investments to support our long-term growth as well as the increased headcount and related expenses associated with our recent acquisitions. As I noted, adjusted EBITDA for the quarter was a loss of $100,000, which compares to positive $100,000 a year ago, with the decrease being primarily due to acquisition accounting.

Net loss in the second quarter was $1.4 million compared to a net loss of $1.2 million in the year-ago quarter. Based on 27.8 million basic and diluted weighted average shares outstanding, net loss per share was $0.05 for the second quarter, also better than our guidance.

Turning to our balance sheet. We ended the quarter with $45.3 million in cash, cash equivalents and short-term investments, an increase from $39.7 million at the end of the first quarter, primarily due to the $10.4 million in proceeds from our follow-on offering in April, offset by an operating cash outflow of $3.9 million and capital expenditures -- and capitalized software development cost of $1.7 million.

Total deferred revenue was partly -- $59.6 million at the end of the quarter, an increase of 37% from a year ago. As we've noted on prior calls, our deferred revenue balance at any -- at the end of any given quarter can vary due to a number of factors. As such, even though we have predominantly annual payment terms, deferred revenue is not always a meaningful indicator of the underlying momentum of our business from a quarterly perspective, though we believe it is directionally relevant over the longer trended period.

Now let me turn to outlook. With better-than-expected second quarter performance and continued business momentum, we're increasing our full-year expectations for revenue and profitability.

For the third quarter of 2017, we expect revenue to be between $26.3 million and $26.5 million. We anticipate an adjusted EBITDA loss of between $300,000 and $100,000. Adjusted EBITDA guidance assumes an estimated stock-based compensation expense of approximately $4 million for the third quarter. We anticipate a non-GAAP net loss of between $1.8 million and $1.6 million or between negative $0.07 and negative $0.06 per share based on 28 million basic weighted average shares outstanding.

For the full year, we now anticipate revenue to be in the range of $102.3 million to $102.7 million, representing year-over-year growth of 33% to 35%. We're now anticipating an adjusted EBITDA loss of between $1.8 million and $1.3 million for the full year 2017, which includes positive adjusted EBITDA for our core business, offset by losses from acquisitions earlier this year. We now expect a non-GAAP net loss of between $8.1 million and $7.6 million for the full year or between negative $0.29 and negative $0.27 per share based on 27.9 million basic weighted average shares outstanding.

In summary, we're pleased with our continued progress during the first half of 2017 and we remain optimistic as we look to the rest of the year. As we execute our -- against strategy, we're meeting our growing demand for Critical Event Management technology while expanding on our leadership position in the marketplace in order to capitalize on the multibillion-dollar market opportunity ahead of us.

With that, operator, can we now open up the call to questions, please?

(Operator Instructions) And our first question comes from Brad Sills from Bank of America.

Just wanted to ask a little bit about the public sector vertical counties and municipals. How did that track this quarter? It sounded like a lot of the strength came from corporate and healthcare, but any color there would be helpful as well, please.

No, I -- thanks, Brad. I don't think, to be honest, the actual percentages change much. Might have been 1% or 2%, but nothing significant. And the overall government sector is still -- it's #2 for us, as I mentioned in my prepared remarks, and continues to grow on pace with last year. Obviously, larger city, county, state wins will impact that. And we've already spoken to that topic in past, so I won't comment on it again, unless there's a specific question. But in simple answer, a good, solid quarter and believe that we'll continue to do that. We just can't highlight every name and, increasingly, we will probably eliminate some of the names and try to highlight a fewer in number because we don't want our competitors to use it. But any follow-on questions from that? Does that answer your question?

That's helpful. Yes, appreciate that. And then, any -- it sounds like IT Alerting was an area of strength again this quarter. With that, are you seeing cross-sell into the corporate base? Do you see -- I think you mentioned mostly hospitals there for IT Alerting. Is there something about the offering that lends itself more to that vertical? Or are you seeing kind of broader traction there?

So we brought on, as I mentioned last quarter, and we did a press release on it, a new executive to lead our go-to-market. That executive owns the kind of product direction and some of the go-to-market, and he'll report to Bob Hughes in his new position. But he's made a big impact with us and helped us dramatically focus the product. I would say that -- again, I gave you the big example was Charter Communications and that was a significant win, hundreds and hundreds of thousands of dollars for an organization that was able to combine multiple different departments and organizations. That's the former Time Warner combination with Charter, and it's a big business now. I think it's a Fortune 100 business. And so that was a big win in corporate. That was my lead-off example, and then a couple of the other ones may have been healthcare. But it's probably still dominated by corporate, not healthcare, and healthcare is up and coming. And that's important to us because healthcare and corporate are 2 of our top 3 markets. But I'd say it continues to be, I don't know, 60, 40, 70, 30, something in that range for corporate. We don't give out specific guidance there. And we just saw increasing adoption. The product is more mature. It's now 2 years old, so we're really starting to pick up traction with it, and we're excited about the future for that product.

That's great. And then just one last one. On the international, you mentioned some strength there. Do you feel like you're really hitting your stride there? Is there something different about compliance, if you will, in international geographies that perhaps now you're kind of gaining some momentum there? Just a little bit of color on what's driving that.

That one's easy, Brad, and everyone probably knows this. We're a business that has an unusual and increasingly frequent driver, which is when bad stuff happens, people pick up the phone and call Everbridge. And so as you gentlemen and ladies know, in the past couple of quarters, there have been a lot of bad stuff happening. In London alone and the U.K., 3 major terrorist incidents causing multiple lives to be lost. Major weather events, typhoons and earthquakes and hurricanes throughout the part of the world, and people increasingly turn to Everbridge, pick up that phone because we are the leading brand worldwide and the scaled provider of those services. So I know our U.K. team is probably seeing one of the biggest inflows of new opportunities. Whether that's translating into the difference from a roughly 10% or so international, I don't think so yet. I think that's still yet to come, but that's part of the reason to broaden that team, with Javier Colado coming on board, and focus on continued expansion internationally.

And our next question comes from Tom Roderick with Stifel.

So Jamie, I was going to ask you about the sort of the cross-selling opportunity here and the selling motion that goes into it with relation to the VCC product. It seems like you had some nice early traction there, selling that sort of back to base and interest from that. But can you talk about how you're sort of organizing the sales force, what you're doing from a training perspective, and what is left to do in terms of integration between that product and the core?

Yes. So the strategy is -- that is a big part of our strategy and why we think we have a hopefully, very predictable and scalable revenue model for future quarters. As we build out the product set and have a very scaled platform -- if you remember our initial IPO message was, "Hey, we built this platform that can deliver zillions of messages reliably across the globe or transactions to collaborate and communicate, and now, we're adding products on that, leveraging those profiles and those engines to deliver, communicate, handle workflows across entire groups like security operations or IT operations." And so it does put pressure on our sales team as we get to be having 5, 6, 7 applications in that Critical Event Management suite. They do have to learn all those. We're somewhat focused on vertical organization. That's why you have corporate, government and healthcare here. Those are 3 of our largest verticals. And as I said in earlier calls, we continue to upgrade our sales team to be prepared to sell, instead of a $50,000 or $100,000 enterprise win for Mass Notification. As I mentioned, the large enterprise software company, that was someone who spent $200,000 for Mass Notification and spent over $200,000 for VCC. So 2 -- I think Incident Management was in there. So 3 of our products generating $0.5 million, that's exciting to us because it portends that in larger organizations, Forbes, or 1,000, 2,000 leading government sectors, we have the opportunity to sell a very large enterprise solution. And with that will come continued growth in the sales force, knowledge, segmentation. That's really one of Bob's biggest challenges as he comes on board. He's going to have to get his arms around that, and we're hoping with his dramatic experience at Akamai, he's probably seen every one of the mistakes people make and, hopefully, we can avoid some of that with his experience and allow us to mature that team and grow its execution capability in a much larger average deal size. But that's what the product strategy has been about for 2 years here, and I think you're seeing, with the multiproduct deals, early indications that if we can sell 3 or 4 products and increase the ASP from under 100 to 300, 400, 500, then with a coherent integrated Critical Event Management strategy, we should be all over that and looking at $500 [$500,000 [sic]] to $1 million, and that's what excites us right now. That's the opportunity in front of us. It's still not here because as we said, we won't integrate that fully until the start -- middle of next year with VCC. But the early success we had with customers literally saying, "We're buying your standalone Mass Notification and Incident Management product, and then we're going to buy VCC on the front end of that." At least is some substantial votes of confidence that, that's -- we're headed in the right direction and they're willing to spend for the added value and benefit we can deliver to an organization, both operationally and from a security standpoint.

That's really helpful. Quick follow-up for you. Brad just asked a second ago about the public sector. I guess, I didn't hear sort of an update, if you wouldn't mind, with respect to the state-wide opportunity in front of you. You've talked about it anecdotally in the past. It sounds like pipelines are building, but understanding they're big deals and they're a little bit lumpy. Can you just provide some context for us to think about how excited we should still be about that opportunity?

Yes. So you answered part of the question yourself, so I'll remind you that you said they can be quite lumpy and we can't always control the timing. What I said in, I think, our Q1 call was that we had already entered kind of a contract finalization or award process, and a couple of these contracts had gone to public notice and public hearing. And because we didn't want you to think we didn't know what was going on in our own business, we kind of got in front of that. We continue to be the same, I would prefer to say, mature management team that won't name names until they're signed, sealed and delivered. So we have no diminishation of -- or no less number of large city and state deals in the works. That's increased, not decreased. But until they're 100% finalized and awarded, we won't comment past what we've commented on, which is multiples have gone into the final stage. And as you'll remember, and I hate to call your attention to it, but in the state of Florida, we won and then it took us 3, 4, 5 months to get through the appeal process. And no one likes to be a loser, and so there are people that sometimes raise their hands. But it's -- I wouldn't change anything in your analysis, and we're certainly not trying to guide to anything different than what we said. They just tend to be lumpy and time consuming, and we continue to work aggressively on them coming in this year.

Our next question comes from Michael Nemeroff with Crédit Suisse.

This is Alex Hu on for Michael. Just one for Jamie. With the increase in multiple product deals, does that affect the timing of closing them as they get larger? I guess the bottom line is, will you be able to keep the same deal closing cadence as the average deal size grows from selling multiple products?

So we saw a little bit of conflicting evidence, right? I was quite shocked myself this enterprise software company -- and we don't name all the names, and we're going to increasingly -- I'm going to try to be a good executive and not name names, so Ken doesn't slap me on every one of these earnings call. But from a going forward standpoint, we were a little shocked that this enterprise software company, which is horrendous and has a reputation as both a shark tank and a tough negotiator in technology took us, I don't know, multiple months to get an MSA done, and then turn around because we had the MSA, have the relationship, purchased with VCC in under 30 days. I was kind of shell-shocked. I do believe it's partially indicating the power of they want to go with one throat to choke, and if they're going to be spending in the order of $0.5 million or $1 million, they'd prefer that from one strategic vendor. That's our belief and our thematic behind Critical Event Management. But I don't want to kid you that $100,000 deal is probably faster to close than $1 million deal. So over time, we'll see. That's part of the maturing of the sales team, developing the actual battle cards and play cards for the sales team and maturing the sales team, which will hopefully bring that down and keep it in line. Today, we expect them to be a little longer, but we haven't seen anything extraordinary pop up because we're doing a $300,000 deal where we used to do $100,000 deal. Just haven't seen it.

And our next question comes Terry Tillman with SunTrust.

So first question, Ken, just relates to accounts receivable. It did look like it was a meaningful impact to cash flow in the quarter. Is that just the nature of the beast, signing business late in the quarter? Or anything around agings of receivables? And I'm just kind of curious, should we see kind of a stronger ramp in cash flow in the second half?

Yes, it all comes down to timing. We'd talk about this with each quarterly earnings call that as much as we try to get deals done every business day ratably throughout the quarter, sometimes, they will bunch up. Buyers have historically been trained to buy towards the end of a quarter. And we've also talked about the fact that sometimes, existing customers on renewals will say, "Okay, it's a -- let's assume, a July 1 renewal, but would you mind billing me June 30 because I have budget left." Or it may be a June 30 deal, and they'll say, "Please don't bill me until July 1 because I need to get it in the next budget cycle." So the one thing that I can tell you consistently is that it will be inconsistent, and you can't read anything into it.

Okay, fair enough. And I guess Jamie, kind of a bigger-picture question in terms of you guys helping articulate kind of this new market around Critical Event Management, have you been able to discern any kind of C-level attention you're getting in some of these opportunities? And I guess, what I'm curious about is do you think it hurts or helps not having really any good comps or proxies or peers out there kind of pitching the same idea of Critical Event Management?

Yes, that's a fair question, Terry. I think, look, one thing that we're seeing -- and it gets back to the previous question about closing and large opportunities is I'm increasingly hearing this -- I heard about one being worked at a -- one of the largest companies in the world, and they said, "It's going all the way up to the President to sign." I don't like that in terms of deal timing. I love it in terms of the CEO or the President knows who Everbridge is, and it's that critical a platform for them. That's what we want, right? So we just have to balance those 2 things. And then as it -- what was the second half of your question?

Well, no, just in terms of you all articulating this strategy or this message of Critical Event Management. It does seem like it's kind of a newer category you're trying to kind of build out here. And I'm just curious, sometimes, if some of these bigger enterprise software companies get into market that helps validate and just creates a bigger noise factor, but you not having a lot of good comps that are saying the same thing. I'm just curious if that actually makes it a little bit more challenging because, then, you have to be the evangelist.

Yes. Not really, because I think if you look at the combination of, not just the contextual understanding of predictive analytics and risk assessment and analysis, the communications space, the incident management space, the location of where, and mobile space. All those markets are what we're combining into to be the operational dashboard and the operational playing field for major corporations. And it's clear with the number of incidents that every corporation has to deal with this. Anyone with thousands of employees, and there are thousands of those companies across the globe, needs one of these platforms. And so, what we're doing is aggregating that entire space and the only guys that claim to do it on a single, unified platform with scale, reliability and global reach. And because of that, I don't think we look at it as no other players. We have thousands of competitors. They're just individual-line competitors. We just happen to be the first SAP of Critical Event Management and, in that sense, yes, we have to lead the charge. But most of these organizations have these component pieces. They just haven't stitched them together in a coherent platform and, therefore, when an emergency happens, they got to go to 6 different systems to see the data, to understand the impact, to communicate, collaborate, to keep people safe, basically, and their operations running. And because of that, I think we're in a great position. And I'd rather lead that market with real -- really no clear competitor, except for small multiples in the individual component markets. It's a much easier space to grow the business, we hope, for the next 2, 3 years.

(Operator Instructions) And I'm showing our next question comes from Brian Peterson from Raymond James.

This is Kevin on for Brian. Could you walk us through the balance of your long-term growth drivers in terms of new customer adds versus revenue per customer? And how should we think about that mix maybe over the balance of '17, but maybe even longer term?

Well, we don't try to, other than the fact that when we went public, we gave out some rough numbers in terms of the base and new. The leading indicator that you're getting from us is the new products, obviously, 2, 3 years ago, before we had any other products outside of Mass Notification and Incident Management, you only had those 2 and they represented 100% of our revenue. Since that point, we've introduced now 5 new products, including now the VCC product. And we said that in this quarter, not including Crisis Commander or VCC, they accounted for 36% of all new and growth sales to existing or new customers. So those new products are growing very quickly. What's the upside on that? We don't know. At some point, we'll reach an equilibrium or we'll have a huge organization sign up, and that will make Mass Notification harder to offset by that number. But it's been growing consistently every quarter since we went public, 4 straight quarters. Other than that, our base, we continue to renew with best-in-class metrics. And it's a very large base. Whatever revenue is this year, you pull it forward and subtract whatever it is, 4% or 5%. And you roll it forward. So we don't give other metrics on that. Ken, any comment?

No.

Yes. So that's how you'd have to model it. You certainly want to look at a lot of our growth, both from existing customers, which is a substantive driver, and net new seats, and with us recording anywhere, we keep saying, between 100 and 125 new customers a quarter, that's a significant driver to future growth. And if we can grow the size of those deals, we can grow our business fairly rapidly even without growing the number of deals. In other words, if I do 125 deals at $100,000, it's a lot less than doing 125 deals at $300,000. And so, we're trying to do both of those. We're trying to consistently grow by adding 120, 125, 150 new customers; grow the size of the average transaction; and then grow the cross-sell into the base. But we don't break those down other than the 36% contributed by new and growth, because it becomes lumpy and then people micro manage it quarter-to-quarter, to be honest.

Got it. And then could you talk a little about your acquisition pipeline right now? And do you see any potential adjacencies that might be a good fit with your current product portfolio longer term?

Sure. And when you say acquisition, I think you're saying not customer acquisition but M&A transactions. We've said that we -- we finished Crisis Commander and IDV off really right at the start of the year and in the middle of the first quarter. I think when we finally closed up the IDV stuff, it was end of January, start, middle of February. So we've only had that completed for 1.5 quarters. And to be honest with you, I'm going to trump -- tranche out that maturity tab again and just tell you that we think we need to make sure that's running smoothly. Saw very good results for both of those product groups this past quarter, but we'd like to get another quarter under our belt, making sure we have operating rhythm. We have the future plans for the product integration on track, and all those are kind of thumbs-up. And then we'll turn our attention to the components within our suite -- or Critical Event Management suite, which we have said historically, and I'd continue to reiterate, we build out, things like more Incident Management or workflow capability, we said on our roadshow, and more analytics and predictive analytics on the back end. And those are 2 areas we continue to look at, everything from AI to predictive analytics and workflow and Incident Management. And as we have time later this year, we may turn our attention to small product tuck-ins. We haven't mentioned anything other than that with our M&A strategy. We have really at this time, not in the negative sense, but no other comment on it because we're just trying to make sure we're delivering the goods for our shareholders.

(Operator Instructions) I'm showing no further questions in queue. I would now like to turn the call back over to Chairman and CEO, Jamie Ellertson.

Thank you, operator.

Okay. So we appreciate you joining this, as I mentioned, fourth -- it's our Q2, but our fourth call since becoming a public company, and we look forward to seeing you all at investor conferences and out in the field. Thank you very much.

Thanks, everyone.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.