Everyone, good morning. My name is Scott Berg. I lead the enterprise software and SaaS research efforts here at Needham. First of all, I wanted to apologize for being a little late. I'm having some technical issues, but good to go. However, the one thing we're not going to be able to take on this fireside chat with Everbridge is audience Q&A. Unfortunately, the issues I'm having won't allow me to be able to pull the questions effectively, but let's move on. With us today, we have Everbridge. We have the company's President and CEO, Dave Wagner. Dave, thanks so much for joining us. Great to be here. Sorry I had travel problems. I'm not the only one who had travel problems, I'm sure, this week, but I missed being there in person. I'm pleased to have this opportunity to spend time with you, Scott, and other Investors by Zoom throughout the day today. No problem. We will do it again, and I do apologize for any background noise. Because of the schedule change, I have to take the airport, which is leading to my technical issues, so... But, you know, Dave, for those less familiar, how about starting with an overview of Everbridge and its product? So, you know, Everbridge is the leading provider of critical event management software, and I'm really proud of our customers and the journey that they're on with our technology to keep their people safe and the organizations running. And so our customers use our platform to get situational awareness using risk data feeds, visualization, to be able to be prepared, to respond to critical events and recover more quickly. Got it. Well, before we jump into some of the product and industry questions, you know, Dave, you're now completely settled into the CEO role. That's right. You've been there for roughly a year and a half. Could you walk us through what changes you're most proud of and the key pillars of your outlook, you know, as you think about, you know, 2024 and 2025? Yeah. I think, you know, I would just reword that a bit to, you know, the things that have gotten the results I'm most proud of. You know, when I started, the board, you know, and I, you know, listening to our investors, you know, had three priorities. You know, one was, you know, capital structure. You know, get that solidified. Two, make great progress on product integrations. And three, drive more go-to-market efficiency. If I think back over 18 months on those three things, with respect to thing one, you know, with the cost work that we've done, which is difficult work, with our guide for Q4, we expect to end the year, you know, at approximately $85 million of EBITDA and approximately 3x debt to EBITDA. Really major improvements in our capital structure in the year and a half, and I'm really proud of that work, and I think we can, you know, check that as that being in terms of the capital structure part of it, check that off. We're of course gonna continue to focus on growth and profitable growth and profitability, but from a capital structure perspective, I'm pleased with the results we've gotten there. From a product perspective, the velocity of the engineering team has, in my way of thinking and looking and measuring, has improved, and particularly, I'm proud of the Everbridge 360 launch, because that's the most visible tangible customer benefit of the platform rationalization work we've done, and so our customers are seeing value for that. At our Customer Advisory Board in November, I had several customers seek me out to say, "Dave, I'm so pleased that you and your development leader stood up on stage a year ago, and with what you've delivered. You've done exactly what you said you were gonna do." So I'm really pleased with the progress and the results we're seeing on the product side. The go-to-market one, we've been continuing to drive improvements and improvements in efficiency, and following, as you know, a kind of a rough Q1. Q2 was better, Q3 was better, our pipeline build. And so the steady progression in the results we're seeing from a go-to-market perspective, I'm also pleased with. So, it's been a lot of wood to chop. We're not, we're not done, but I'm really proud of the team and, you know, pleased with the results we're making on those three primary focus areas. Oh, you're muted out. You're muted out. It looked really good. Well- You're on a roll. I'm doing a good job of talking to myself, apparently. Just trying to keep the background noise out. Let's start with, probably the number one question I get on the company, which was effectively the, in line with what you're discussing on your third point there is around growth. My 2023 model here has, you know, 3.7% growth in line with your guidance for the year. I know you've given some cautious commentary next year around, you know, some of the one-time revenues and impact there without guiding to 2024. But subscription revenue growth, your ARR growth, you know, tends to trend in the upper, you know, single digits. But as you put all that together, what are kind of the pushes and pulls or levers to get you to that 10% growth target that I know you're seeking? Yeah, so that's a lot in that question, Scott. Right. So it's obviously a good question. It is a top question. So the key thing you pointed out in your question that I'll just re-emphasize, is the impact of the one-time revenue items. You know, when we did our Investor Day a little over a year ago, you know, we made it clear that our focus is on those recurring revenues. We perceive higher customer value and higher- Mm-hmm ... from driving the recurring revenues. And so, you know, one thing is, when you focus on one thing, you can't, you can't do everything. And so we, we're focused on ARR. And so that, you know, that is our focus.... and so, and the one-times have dropped for reasons we've discussed. Largely, the dearth of public warning deals outside of North America this year, and number two, that large deals generally being a little bit more challenging for us here in this current outlook. On the subscription side, not making excuses, but we've had some divestitures and the focus, you know, the focus we're putting on. But the more meaningful thing that's affecting the growth rate, you know, thing one is the markets. I don't wanna miss hitting that, even though you know, all of the industry reports when we look through that, you know, we do perceive our core CEM market to be growing low double digits, and that's, as you, Scott, says, the rate at which we're aspiring to. That's not what the market is growing at. This year, we think our subscription revenue growth and ARR growth is very much in line with the market growth rate for 2023. But what we're lapping now are the year-over-year decline in recurring bookings, and you know, that's what we'll start to see, or the way we're building this progression of our go-to-market efficiencies. We, you know, we're expect to start to see year-over-year bookings increases, which will, you know, contribute to, you know, sustaining or, and, growing the subscription revenue streams. Got it. And then, you know, as we think about the different components of the business, government side is actually probably the one I get the most on, 'cause I think most realize the corporate side is really well underpenetrated. But how much... You know, how do you think about market penetration on the government side, you know, especially in a segment that's been a really good driver for the last four or five years- Yeah ... And And maybe specifically for Mass Notification or, or are there other modules that you can effectively sell into them? Yeah, what's exciting to me about the government side is, it's really like the enterprise in that our largest customers are using, you know, our technology, much more deeply and much more sophisticated ways, than our others. And so you take cities like, you know, New York City, you know, top customer, the National Capital Region around Washington, D.C., L.A. You know, our biggest cities in the nation with the largest and most sophisticated emergency management departments, they're using our technology for more than just, you know, the alert of hurricane. You know, that would be the basic use case or basic tornado alert, which that capability, the basic notification capability, as you said, is penetrated largely. But there's so much more that governments can do with our technology and the leading governments are doing. So I think we'll continue to see meaningful investments in keeping people safe at the government level. Taking this question two more steps, if you don't mind, Scott. You know, the national public warning systems, you know, we continue to see as an opportunity for the company. We cover across our enterprise and public warning, we cover 2 billion of the world's citizens today. There's 8 billion people in the world, so 25% coverage is great, but it's not enough. There are still lots of opportunities to deliver life-saving technology through mass notification around the world, so there's a great opportunity there. As we, you know, look forward, you know, we're also, you know, leaning into the U.S. federal government opportunity again as, as, one of the largest employers in the world and, and, one of the most sophisticated users of these kinds of information. We've been, you know, leaning into the federal market and, last quarter, you know, as you know, as we just, you know, shared, we had our first CEM in a DoD department. So, you know, that's, you know, for the future longer term, but I see the government opportunity in those three layers, and we're gonna continue to, you know, make sure we're servicing that segment, as well as the enterprise, where we get our core strength and the majority of our revenues. After, you know, just trying to understand where the growth levers come from over the next couple of years, a common question tends to be about your competitive environment, and it's kind of funny to me is I get a lot of questions on the HR and sales technologies that I cover out there, 'cause they're a really big market. I get a lot of those questions on Everbridge. You know, how much better do you think the customer and the platforms are positioned today versus maybe who you see in the end market? Yeah. So, you know, I would point you, and I know you've looked at this, but I really point our Investors to the Forrester Research report published on December 7. It's the front page of our website. If you just at www.everbridge.com, you'll be faced with that report that we're really proud of because it's the first comprehensive report around critical event management, and of course, positions Everbridge as, you know, the leader in the top right quadrant of their assessment. And so that report, I think, does a nice job of pointing out the advantages of Everbridge leadership position, and where we fare relative to competition. As you look at the other names on the front page of that report, you see a lot of smaller private equity owned companies or divisions of larger, much larger public companies. And so you think about the competitive landscape, we do respect our competitors. They do a nice job in many niche situations, but nobody has the focus that we have on critical event management. No one has the breadth and capabilities that we have in critical event management, and we're, you know, working hard to make sure that we continue to maintain and extend our leadership position. Everbridge 360 was recently launched, as we start thinking about product a little bit. I guess, what is it? It's newer. I don't think a lot of the investors are familiar with it. Yeah, so Everbridge 360 is one of several major projects that the development and product team accomplished this year. 360 is really important to me and our customers because it brings together in a much tighter, seamless way the earlier M&A of the company and the products that make up CEM. Those being the visualization map layer, the data integration, and the integration into the workflows for crisis management and ultimately notification. And so the workflow has become with Everbridge 360, you know, the look and feel is tightly integrated. The workflow is simpler to navigate, and what that does is make our world-class technology more accessible to more customers. And that idea of bringing resilience to a broader audience really drives our product team, this idea that resilience should be available for everyone. And so it's a really important step in, one, servicing our existing customers and delivering the capability they want. You know, two, for future customers, you know, making that initial pilot experience better. And then, you know, three, driving accessibility to the technology forward, and we expect to continue to make improvements along those lines. So staying on the product front for a moment, I know integrations have been a focus for the company over the last year-plus now. I guess kind of two questions within there is, you have all these acquisitions, you've fully integrated now. I guess, first one is, is that an accurate statement, that we're fully integrated? And then secondly, out of all the product integrations, what's probably most important in terms of cross-sell opportunity going forward? Yeah. So, you know, fully integrated, the part that I'd say is fully integrated are those, the core CEM components through Everbridge 360 that I just spoke about. We have the great advantage of having a really great breadth, by far the highest breadth of technology, you know, in this space. You know, moving from the public warning capability that, you know, is available for literally tens and tens of millions of residents and scalable to tens of millions of residents, you know, down to the desktop alerting product. So we've integrated key components, the integrations as a priority investment I think are gonna continue into 2025. You know, this year we got the desktop alerting, AKA, also known as SnapComms's technology, integrated as a delivery mechanism into the platform. We've got work to do to take that message composition capability and integrate into the platform. We've got further integrations to integrate the public warning message delivery. So we've got lots of opportunities ahead still to drive integrations. And those integrations, what's exciting to me is those integrations as delivered continue to drive the breadth of our solution. And then, you know, Scott, as you alluded to in your question, drive the opportunity for, you know, cross-sell, add-on sales, you know, when the capabilities are more tightly integrated. So I guess lastly on product, I know this last year in 2023, you divested a couple of smaller acquisitions. You know, we'll call them non-required, maybe technologies that you acquired through other larger acquisitions. You know, what does that opportunity look like in 2024? I think you've talked about or at least discussed maybe divesting another product or two. Is that still gonna be the case, and is there a way to think about the size of that impact? Yeah, there's really... I think I would say for sure that the work that we set out to do with the restructuring plan announced by, you know, Patrick and the other Co-CEO before I joined, you know, that work is complete. The overall portfolio work, you know, is work that, you know, we'll continue to drive forward on, as I said, through 2025. I don't think there's an easy way to think about it, you know, Scott, other than we're gonna continue to focus on growth, focus on the parts of the business that integrate more tightly, drive more customer cross-sell, and make our investments prioritize there. Okay. Let's move to go-to-market. Another popular topic on the company is, you know, so you've talked about sales productivity in the last quarter, improving, I think it was 16% year-over-year and some of the strongest gross new bookings you've seen in the year. Yeah. But how do we think about that productivity trending? Are you kind of at where you expect deep levels to be, or do you have some further efficiencies you can gain? Yes, we have further efficiencies we gain. The way I think about it, and, you know, I always start with, I have for a long time, with a real focus on our tenured sales force. And, you know, in enterprise software, that true tenure productivity, you know, to me is somewhere, you know, on average, around three years. And so it's quite a ramp-up to full productivity for an enterprise rep in complicated technology. And that cohort of sellers, you know, as of the third quarter, is driving right at and just a touch higher than the productivity they've been at, you know, and as far back as we have measurements, which is quite a ways. We're seeing good productivity in our ramp-up of first-year sellers. And so even though the productivity is lower, we're seeing good comparison, meaningful improvements over the two-year ago performance of those one-year reps. And then it's the 13th month to 36th month that we're really focusing on our training elements, our development efforts to drive that productivity cohort up. So that's a long-winded way to say we still have an opportunity, and then the opportunity continues to move forward perpetually as we, you know, focus on retaining our top talent and onboarding talent more effectively. So I am pleased with the 16%. We do have, you know, more work that we can do there. I know one of the things you've done on the go-to-market side is giving your reps more flexibility, since you came on, in terms of how they sell the platform and the product. You know, whether it's meeting an initial customer's pain point a little bit differently on a point solution basis or even a smaller, you know, initial land. How have those changes, you know, positively impacted the, you know, the, the near-term close rates, and do you feel like you're still able to cross-sell the rest of the platform effectively to capture the same, you know, long-term opportunity with those customers? Yeah. And so I think that's, you know, a really important part of the SaaS motion. You know, we call it, you know, our two by two. You know, clearly, our focus and our long-term, you know, OKR is to get to the 1,000 CEM customers. And those are the customers that have our, you know, the breadth of our capability. Most importantly, they're the ones that are really at a best-in-class level in terms of their resilience and their ability to protect their people and their operations. But we do wanna meet the customers where they are, and we've adjusted the comp plan. You know, obviously, the... You know, we want every seller to sell as much as possible, and, but we also don't want them, you know, pushing for a too broad of a solution if the customer journey isn't there yet. And so to us, to me, resilience is a journey, and we're very happy to bring a customer into the Everbridge family with basic mass notification or basic desktop alerting or basic crisis management, and work with them as they drive their maturity up around resilience. And so having that emphasis is allowing us to continue to attract, you know, meaningful new customers. Our transaction totals have been super consistent this year over last. You know, deal sizes are down, but I think some of that is macro that we've talked about, and some of that is adjusting to meet the customers where they are and bring them on this journey toward optimizing their resilience posture. Last question on your go-to-market motion: retention levels seem to be pretty good. It's something you feel pretty generally comfortable with, but the company had some downsell pressure in Q3. Right. I guess there's kind of two questions in there is: Why would someone actually downsell on some of your products? Because it seems like that opportunity is minimal 'cause it's not necessarily tied to a per-seat basis. But then, two, I know there's some investor concern that there might be the potential for more of this going forward, that, you know, like some of these companies, we'll just take Zoom 'cause it's well-known, right? You had this big pandemic bump use in their product- Mm ... and then they had downsell for a long time. Are any of those, you know, components that investors should be thinking about, or is Q3 really kind of a one-quarter thing, do you believe? So that, as I said, the Q3 downsells, you know, were up just a little bit. They weren't enough that I pointed them out. They were concentrated in the Digital Operations part of our business, where the primary driver of our licensing is number of contacts, which is, you know, primarily people, 85%. We have contacts for buildings and supply chain nodes, but at least 85%-90% of our contacts are employees. And so there is, you know, some downsell pressure to the extent our customers reduce the number of employees, which, you know, in 2023, you know, we saw some of that, but it was just isolated to a few in Q3, not isolated, but isolated to a few Digital Operations customers, who, you know, pulled back on the number of services that they were using our software for. ... So moving on to a couple financial questions. You are a recovering CFO from what I hear, so well qualified on the finance side. Your initial 2024 guidance calls for some, you know, pretty healthy growth and adjusted EBITDA levels. You know, we penciled this out to be about 350 basis points, given your commentary at a conservative, conservative low single-digit revenue growth rate. So where do you drive the additional efficiencies through? I mean, the easy item is always sell more product. That contribution margin falls through really easily, the steady state cost structure. But it appears that you probably have a little bit of cost compression to go to, to go to meet those goals. Yeah, and so what we talked about on our Q3 call in November, you know, was this target to improve our EBITDA dollars an additional 25% year-over-year as the target. And, to me, it relates back to the beginning of this conversation, where we talked about the product integrations and the sales productivity. And, and what that to me does is begin this virtuous cycle of becoming more efficient and more streamlined as an organization. And, and so even though, you know, things like the products that we divested last year wasn't multi-millions of dollars, but each one of those things, you know, makes us more efficient as an organization as we do the development work and get the... As we did with Everbridge 360, get the API framework set and the vision set. We get the UX framework set and vision set. We get standardization of the technology frameworks. Everyone starts to work more efficiently, and so I think, as I think about it, as a recovering CFO, the initial steps we had to take for costs in the 2022 timeframe, you know, that was more of the blunt instrument and the very painful, we're gonna cut X amount of headcount 'cause the capital structure requires it. Now we're more into the virtuous cycle of driving streamlining that we expect to continue, again, as we laid out a little over a year ago, as we marched progressively towards the Rule of 40. Yeah. Speaking of the Rule of 40 and 27, you seem to be as confident as ever in your ability to achieve those goals. I know the initial framework kind of had a thought, probably of, of that growth rate in that double-digit range and, and obviously, the margin structure closer to probably 30%. But do you have flexibility in that model? Obviously, if growth is higher, you know, margins can be lower, but if growth is lower than that double-digit kind of target, do you think you have flexibility in the model to drive enough margins to still equate to that Rule of 40 target? I mean, that's exactly what we're focused on. It's a growth-first mindset. We're trying to make sure that we continue to drive, you know, among the whole team, you know, a growth-first mindset. As I've said, our vision for enabling resilience for everybody leaves us a lot of, you know, opportunity, you know, white space and upsell space around the world and in every segment, even here in North America. So we're focused on a growth-first mindset. We're also focused on, you know, driving these integrations, driving the sales and marketing productivity, and, you know, we'll expect to keep that balance as we arrive at the Rule of 40, whether it's, you know, whatever the numbers end up being, whether it's, you know, mid high single digits and in the low thirties, or whether we can get it into the double digits, and it's in the high twenties. We'll keep modulating our investments. Probably last question from me at least is on your capital structure here going forward. I think everyone's pretty knowledgeable about the convertible debt situation, but as you're probably a year into the plan that you laid out a year ago. I think at the analyst that you had in December 2022, you talked about, or at least Patrick talked about, probably having $100 million or less of debt at the point of, you know, when those instruments mature. Do you still feel pretty strongly about what you're seeing relative- Um ... to the cash generation to make that be an accurate statement? Yeah, yeah. Again, you know, going back to, you know, kind of first things first, you know, that was the key thing in October, November 2022, that we, you know, dug in on and set that vision for the, you know, the $85 million of EBITDA and the 3x debt to EBITDA coming out of this year. And so having command of that is, you know, I think giving us lots of options as we enter into 2024. You know, this year is already the year where those 2024 notes, I think it's just over $60 million, that then we've got the cash on the balance sheet will be generating... Continuing to generate cash this year, that keep our cash position healthy, which will put us, as you said, Scott, in that position at year-end next year to have, I think, lots of flexibility from a capital structure perspective to deal with the 2026 notes that mature in March 2026. Well, excellent! That's all we have time for today, and I apologize to everyone for my technical issues, not allowing some audience Q&A, but if there are follow-up questions, feel free to reach me directly at sberg@needhamco.com, or obviously follow up with Dave or Nandan, who runs Investor Relations. If you don't have their contact information, I'm happy to connect everyone there. Thanks again, Dave. Appreciate your time. Thanks. Good luck with all the meetings.