Leading its market of critical event management, this tech company is expected to grow at a rate of 37.3% next year.
Everbridge (EVBG)
From Cabot Stock of the Week
Most people in the developed world go about their days in relative peace. But sometimes life is disrupted by severe weather, natural disasters, active shooter situations, terrorist attacks or some other dangerous event.
Thankfully, technology can play a positive role during these troubled times by improving response times and reducing injuries, anxiety, and property damage. One of the companies leading the charge is Everbridge (EVBG), a $1 billion market cap company with cloud-based solutions that help keep people safe and businesses running during critical events. Given their rising frequency, this is (unfortunately) a growth market. Everbridge says its addressable market tops $40 billion.
The company’s apps quickly collect, aggregate and analyze data to help customers asses threat levels, locate people at risk, deploy resources to help and execute pre-defined communications processes.
The platform delivers contextual messages via voice, text and email to residents, businesses and visitors, in near real-time, in over 15 languages, and on virtually any type of device. To help with response efforts, the platform can also prompt receivers to reply to questions like “Are you safe?” or “Do you need medical help?”
Everbridge’s platform is used by a growing number of cities, including New York City, and states, including Connecticut, Florida, New York, Vermont and Tennessee. It was relied on during Hurricanes Mathew, Sandy, Harvey, Irma and Maria. It’s been used in Super Bowls, live music events, and during marathons, including Monday’s Boston Marathon.
It was used to great effect on September 17, 2016 when a pipe bomb exploded in New Jersey, then another one went off in the New York City neighborhood of Chelsea, injuring 29 people. Before authorities even had a suspect, community members began using Everbridge’s Community Engagement notification system to share details of the incidents, a suspect’s appearance, and his potential role in the bombing. Less than two hours after the first alert went out, the suspect was arrested.
Everbridge has 3,711 clients, including nine of the U.S.’s biggest cities, all 25 of North America’s busiest airports, and nine of the 10 largest investment banks. Half of its customers are businesses, 35% are government agencies, and the remaining 15% are health care institutions.
With the recent $34 million acquisition of Unified Messaging Systems (UMS)—a Norwegian company with mobile solutions used by national and municipal alert systems throughout northern Europe, Greece, India, Cambodia, and Colombia—Everbridge is now the world’s largest global critical event management organization. Prior to the UMS acquisition, international sales represented just 10% of the firm’s total, so expect international expansion to be a big part of the story going forward.
Everbridge was founded in 2002, shortly after the 9/11 attacks, when it unveiled its Mass Notification solution. The company now has eight solutions spanning Mass Notification, Incident Management, IT Alerting, and Safety and Security. With the help of its expanding product suite, Everbridge has been landing bigger, multi-product deals.
Revenue has grown at an average annual rate of 33% over the last three years, and should rise another 31% this year, to $137 million. The company is not yet profitable, and with 2018 likely to be a year of product development and investment, the EPS loss will likely dip to $-0.59 before improving to $-0.37 in 2019.
But investors are looking ahead! As you can see, shares have held above their 50-day line since early-December. That little dip followed a $100 million convertible debt offering in November, which helped fund the UMS acquisition and resulted in very little shareholder dilution. With the growth story gaining momentum (revenue was up 37% in Q4 2017) I see potential for a breakout above 39. One catalyst to keep an eye on is the Q1 2018 earnings release, which is due out on May 7. BUY.
Timothy Lutts, Cabot Stock of the Week, www.cabotwealth.com, 978-745-5532, April 17, 2018