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Everbridge, Inc. (EVBG 3.06%)
Q3 2019 Earnings Call
Nov 4, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Ladies and gentlemen thank you for standing by and welcome to Everbridge Q3 2019 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to your host Mr. Patrick Brickley our Chief Financial Officer. Please go ahead.
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Good afternoon and welcome to Everbridge's earnings conference call for the third quarter of 2019. This is Patrick Brickley Senior Vice President and Chief Financial Officer of Everbridge. With me on the call today are Jamie Ellertson Executive Chairman; and David Meredith CEO. After the market closed today, we issued a press release with details regarding our third quarter results, which can be accessed on the investor relations section of our website at IR dot ever bridge com. This call is being recorded and a replay will be available on our Our 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. We statements reflect our views only as of today and should not be considered representative of our views. As of any subsequent tape, 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 the actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. For a further discussion of the material risks and other important factors that could affect our actual results please refer to our filings with the SEC including our recent 10-Q and 10-K filings. Also during the course of today's call we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally at 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 this additional detail in the future.
With that let me turn the call over to Jamie and David for their prepared remarks.
Jaime Ellertson -- Executive Chairman
Thanks Patrick and thanks to all of those joining our Q3 2019 earnings call today. With David Meredith at the helm as CEO for nearly all of the third quarter I'll keep my remarks short and focused on our longer-term strategy and let David get into the details of the quarter. But first I'd like to say that the Board is very pleased with the way that our executive transitions go on this year. David joined us as our new CEO only four months ago and has been very actively engaged with customers employees and investors and in my view has positively impacted all of our key stakeholders. Our Q3 results exceeded the high end of our guidance ranges. Again with growth of 35% over last year and subsequent improvement in our adjusted EBITDA results. Our strategy to invest in growth by capturing a significant share of the multibillion-dollar opportunities in Critical Event Management and population warning was validated by our strong results this past quarter while simultaneously improving our operating execution to deliver increased profitability from our overall business. And we're excited that we are again raising our expectations for both revenue and profitability for the full year as Patrick will detail in a few moments. During the third quarter our core business specifically our Mass Notification business delivered record results while in parallel we continue to experience increasing demand for both our Critical Event Management or CEM suite in North America and our population warning solution in the international markets. We signed notable deals in all of our core target markets corporate government and healthcare as well as in our leading international geographies.
In North America the signing of the state of California the largest statewide deal in our company's history provided a proof point for the potential we see in our evolving strategy to deliver indirect channels to access increasingly larger overall contracts as well as an indicator of the robust opportunity which remains in our state local and federal government marketplaces. And as in the second quarter we witnessed continued strong customer pull for our CEM solutions with 9 new CEM customers added including early adopters -- adoption by customers outside our target corporate market in North America. This is a positive trend ahead of our rollout of CEM into the international and government markets which we expect to launch next year. Looking ahead we continue to execute on our game plan to win new customers and expand our existing relationships by offering additional applications from our platform to the marketplace. Our recent purchase of NC4 is another great example of how we support this strategy. Completed the very end of Q3 NC4 has combined with our current risk and threat data solutions to form the market-leading solution that enables organizations to monitor and understand how threat events globally may impact those things most important to their success their people their operations or their other assets. And as David will detail we get off -- got off to a great start with numerous cross sales of the NC4 solution into our base in Q3. Finally with the recent announcement of new countrywide alerting wins as well as the even larger European Union opportunities that will begin next year I believe we can safely say that our strategic purchase and development of population warning has put us into a very strong position to continue growing our global business at an exciting pace as we look ahead.
I'll now pass the call over to David Meredith our CEO for more details on our performance in the third quarter.
Thank you Jamie. This is an exciting time at Everbridge. This past quarter, our team continued to rack up an impressive list of achievements and milestones, as well as advanced our market leadership and product portfolio to enable us to continue to scale the business in the years of head. As Jamie indicated, we beat our financial guidance for the third quarter, continuing the track record we've achieved every quarter since our IPO over three years ago, revenue was $52.5 million, representing growth of 35% including contribution from our NC for acquisition. And these strong top line results in the third quarter translated into profitability that enabled us to beat our bottom line guidance with adjusted EBITDA coming in at $1.6 million in the quarter. Our growth continues to be driven by attracting new customers in the under-penetrated multibillion-dollar CEM market and the very early stage international population warning space while in parallel broadening relationships with our existing customers for our core solutions in the corporate government and healthcare markets. And our customer base of over 4800 enterprise organizations around the globe continues to renew at market-leading rates enabling our teams to cross-sell and establish more multiproduct relationships all continuing to drive an increased average sales price. My goal is to continue to focus on the strategies that have made Everbridge successful to date while enhancing and extending our go-to-market efforts in order to continue driving high revenue growth and positive cash flows for years to come. Now allow me to turn to some key financial metrics for the recent quarter.
Our team delivered strong results exceeding all of our key financial and business metrics in the third quarter including adding 184 net new enterprise customers in Q3 which is above the high end of our historical range after including more than 30 net new customers added through NC4 ending the quarter with 4851 enterprise customers. In Q3 we closed the largest solution contract in our company's history. In our most strategic market CEM we added 9 new customers in Q3 up from 8 in Q2. During Q3 we signed 29 deals valued at over $100000 per year and added several million dollar relationships to our customer roles. These strong multiproduct and CEM wins drove our average selling price over the trailing 4 quarters to $75000 in the third quarter up 36% from $55000 1 year ago. Contributing to this growth in ASP were the 112 multiproduct deals we signed in Q3 a record quarterly level compared to 107 a year ago. And to give you a sense of how our new products are contributing to our overall growth 51% of all our new and gross sales were derived from new products in Q3 compared to 50% a year ago. Our international business continues to grow at a very healthy pace now representing 20% of total revenue. Our revenue mix was fairly consistent in Q3 at 55% corporate 33% for local state and federal government and 12% for healthcare as we continue to see growth from all of our vertical markets.
While these metrics all represent continued progress in driving our growth we want to remind you that these quarterly metrics can fluctuate. But as you can see the long-term trends continue to be very favorable. Over the past three years our growth has been driven by both new customers as well as the introduction of new products and the cross-sale into our large enterprise space. Q3 demonstrated the health of all of our key markets from strong results for our core Mass Notification solution to record results for newer products like Visual Command Center Safety Connection Resident Connection and IT Alerting solutions as well as our most strategic solution suites Critical Event Management and Population Alerting. Turning to our success across our key verticals let me begin with the corporate space. In the third quarter 1 of the world's largest car rental companies became a new Everbridge customer selecting our CEM and IT Alerting solutions as the backbone to their new global security operations center. They will use CEM and Safety Connection to reach lone workers outside of airport locations and IT Alerting to respond to and resolve IT incidents and outages impacting their operations. Another new corporate customer who selected CEM in the quarter is 1 of the largest insurance providers in the U.S. This insurer chose CEM to support their global security and business continuity programs. As an existing NC4 customer they saw the power of the combined Everbridge and NC4 solutions to create a comprehensive situational awareness and operational response offering from a single pane of glass.
In another of our focus markets transportation we closed a 6-figure multi-product deal with another of the top 10 U.S. airlines. This airline chose CEM IT Alerting and our new Crisis Management solution to identify and manage risks to flight operations passenger experience and brand in a close to 7-figure deal. Additional notable corporate wins in the quarter include a significant opportunity to drive our network effect with the signing of 1 of the largest not-for-profit organizations focused on managing the threats that can impact specific religious communities in the U.S. from synagogues to community centers. This umbrella organization chose our CEM solution including BCC Mass Notification and risk intelligence to help them better identify and manage potential risks in their communities. Additionally this new organization also may act as a channel for additional sales to the many organizations that this nonprofit serves. Numerous other well-known corporates also became new Everbridge customers in the third quarter across multiple markets including 1 of the largest home furnishing retailers 1 of the largest global chocolatiers 1 of the nation's largest public utilities a global payment technology leader as well as a multinational software company who chose VCC and Mass Notification in a 6-figure deal through our channel partner International SOS.
On the expansion front we continue to see strong cross-selling activities as we drove key wins from our large installed base such as a new CEM deal from the provider of 1 of the world's largest messaging apps who extended their Mass Notification deployment to become a full CEM customer in order to more efficiently and effectively manage critical events on a global scale. Other noteworthy cross sales and expansion deals One of the world's largest data storage companies who added BCC to their existing mass notification and safety connection deployment, enabling our cm suite to enhance their ability to identify events impacting their people assets and supply chain, as well as a leading management consultancy that significantly expanded their use of safety connection to support their efforts in locating and protecting 10s of thousands of employee contacts around the globe, including their large number of traveling consultants and remote workers. Turning now to our efforts in the government markets. We had an equally exciting quarter with significant state deals and ramping activity with U.S. federal customers. New federal government contracts in the quarter included organizations choosing our Safety Connection solution at the U.S. Office of Housing and Urban Development or HUD the National Labor Relation Board and the U.S. Pension Guaranty Corporation. We also signed our first federal government CEM customer in the third quarter the U.S. Department of Labor which added VCC to their deployment of Everbridge to equip the Department of Labor's operations center in Washington with the ability to protect their employees as well as hundreds of physical office locations nationwide.
This win further reinforces our confidence in the potential for CEM beyond the corporate and healthcare markets as we experience market pull into our additional historically strong verticals that we have yet to formally launch our CEM suite into efforts we plan to begin in earnest next year. And the U.S. Postal Service expanded their relationship with Everbridge in the third quarter adding IT Alerting to their existing deployment of Everbridge solutions. In all Q3 represented 1 of our most successful quarters for the signing of new federal logos. Now turning from our federal success allow me to spend a few moments on our very strong showing in the state and local government segment during Q3. For example our network effect in the state of Florida continues to expand our relationships. Think cross and upselling with examples like the Florida Division of Emergency Management selecting our new Resident Connection offering a total deal value of almost $0.5 million and perhaps more interestingly a government deal that closed in under 30 days. Resident Connection the second new product added to our platform in the last 18 months provides verified mobile landline and voice over IP telephone contact information for use by public safety organizations to dramatically increase the communications coverage of affected people that need to be notified during a significant event to ensure that the right people get the right message at the right time. In fact our new Resident Connection solution also drove growth deals at other state and local government customers such as Jefferson Parish Louisiana and Santa Barbara County California.
From a new business perspective our state and local government team was also very busy in Q3 closing new deals with organizations like the state of Texas where we will help protect the State Capitol Complex Hawaii County and Virginia State Parks to name but a few. And of course as was previously announced our Q3 win with the California Office of Emergency Services is particularly noteworthy. This multimillion dollar win represents the largest state deal to date and is in fact the largest deal that we've closed in our history period. Given the success we've had with our network effect in the state of Florida which has led to a multiple of our original contract value throughout the state we're particularly excited about the additional opportunities our California win could drive especially considering that California has nearly twice the population of Florida. This transaction is also particularly important in that Everbridge was partnered with Atos Public Safety to win this bid to provide world-class emergency alerts to California's 38 million residents and first responders. Speaking of California I want to take just a few seconds to recognize the tireless efforts of the first responders working in California right now to suppress the numerous life-threatening fires ravaging different parts of the state again this year. We hope that our statewide implementation will enable public safety officials to better communicate and manage these inevitable tragic events in the years ahead.
With an increasing number of wildfires each year we believe our mission at Everbridge of providing the best technology and people focused on keeping people safe and businesses running is more relevant and important than ever before. We have worked strategically with OEM partners such as International SOS for a long time. But we believe this new California win with our partner Atos Public Safety is a strong example of the type of opportunity that a more active partner channel can deliver. While we are still in the early days of exploring the potential of these relationships the scope and scale of our state of California win suggests that the opportunity could be very significant. Even after considering that with Florida and New York we have already won statewide deals with 3 of the 4 largest states in the U.S. not to mention our Connecticut and Vermont wins. Our strong results in Q3 were also illustrated in the healthcare market where we closed another CEM deal. Molina Healthcare 1 of the largest managed care companies based in California added VCC and Safety Connection in the third quarter to become our second CEM customer in healthcare. We also closed our largest IT Alerting deal ever with Health Care Service Corporation a leading multi-state healthcare insurance provider. Having outgrown their internally built on call solution this existing customer turned to Everbridge due to our commitment to customer success as well as our leading capabilities.
Additionally our healthcare team closed new customers such as Blue Cross Blue Shield of Massachusetts Essentia Health in Minnesota MetroHealth in Ohio Rush University Medical Center in Chicago and the Wilmington Virginia Medical Center in Virginia to name but a few of the team's successes in Q3. Looking at our business internationally we recently completed the implementation of our countrywide Public Warning deployment in Iceland which is now live and operational. In light of the recent EU mandate requiring member countries to have a population wide alerting system in place by June 2022 it's notable that Everbridge is now the first population alerting provider to support 4 European countries: Greece Iceland the Netherlands and Sweden. Q3 also illustrates the breadth of our international success with key deals closed across the globe for all of our key product areas including 1 of the largest international banks which purchased 3 new solutions including ITA and our new Crisis Management Solution in a multiproduct deal that made them a $1 million per year customer. As well as an expansion of our Public Warning solution for the country of Greece. Multiple other geographies contributed including a new MN deal with a leading media company in the U.K. a new ITA deal with 1 of the leading online brokers in Germany our first manufacturing win in Mexico which was a Mass Notification deal covering 5000 employees and a large 6-figure deal for one of France's largest banks. Now I would like to turn to a few operational comments. On the last day of the third quarter we completed all the components of our NC4 acquisition to significantly enhance our risk data collection and analysis capabilities.
Patrick will get into the financial details but we're excited about the performance of NC4 business segments that were completed earlier in the third quarter which exceeded our expectations. This early success serves as another proof point that we are executing the right strategy to extend our leadership as the platform provider for Critical Event Management to the corporate government and healthcare markets. The combination of our pre-existing critical event data sources in combination with NC4's industry-leading analyst-curated global risk and threat data positions us as the clear market leader. Our data offering enables the world's largest organizations to understand what risks and threats exist globally that can or will affect the things they care about most to enable them to protect their people assets supply chains and operations all through our common operating environment called CEM. Early customer reactions to the business combination have been very positive with 1 customer publicly stating that Everbridge plus NC4 is and I quote "a game changer" for proactively mitigating the impact of critical threats around the world. NC4 was instrumental in a number of new Everbridge wins in Q3 including pharmaceutical healthcare and online gaming businesses that selected our risk intelligence capabilities. In my introduction I mentioned that my goal is to continue executing the strategy that has worked so well for Everbridge while also looking for opportunities to further extend and broaden our reach.
I believe that channel partnerships including indirect sales and subcontracting can be 1 such contribution to our go-to-market efforts as we look ahead. Clearly our statewide win in California with Atos Public Safety is a strong example of this. To that end I'm very pleased that we had a smooth transition to our new Chief Revenue Officer Vernon Irvin which supported our strong execution in the quarter. Vernon is focused on continuing to drive our move upmarket into the C-suite at Fortune 1000 companies helping us penetrate international carriers and countrywide deals and expanding our routes to market through indirect partners like Atos. In summary I'm excited that during my first full quarter as CEO we again delivered results that exceeded our guidance ranges. We had a wide variety of notable wins from the state of California which is the largest deal in our history to our largest IT Alerting win our continued strong CEM traction with a record 9 new customers and our scaling international business that is expanding in multiple geographies and across all of our key products and solutions. As we continue to broaden and deepen our product portfolio expand our sales reach and build on our winning strategies I am confident that we'll continue to deliver strong results.
Now I'll turn the call over to Patrick for more details on our financial performance and to update our guidance. Patrick?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Thanks David. Allow me to first review the financial highlights from our third quarter and then I will turn to our guidance for the fourth quarter and the full year. Revenue in the third quarter was $52.5 million an increase of 35% from a year ago and above the high end of our guidance range. These results included a better-than-expected contribution of approximately $2 million from our acquisition of NC4. While we are primarily focused on driving top line growth we continue to be mindful of our costs as we make positive progress on our bottom line. As such our revenue over performance helped produce adjusted EBITDA of $1.6 million which was also above the top end of our guidance range. Strong retention is the foundation of our growth and our dollar-based net retention rate remains consistently above 110% as we continue to provide significant value to our existing customers. Of course new customers contribute to our strong growth. And in the third quarter we added 184 net new enterprise customers who generate fees of $200 per month or more ending the quarter with 4851 enterprise customers. Looking at 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 margin was 70.9% up from 70.2% a year ago. As always keep in mind that gross margins may fluctuate from quarter-to-quarter and should not be considered indicative of any trends.
Total operating expenses in the quarter were $37.9 million an increase of 30% from a year ago reflecting the combination of continued product and headcount investments and the incremental expenses of acquired businesses. Adjusted EBITDA was above guidance at $1.6 million compared to $0.2 million in the year-ago period. Net loss in the third quarter was negative $1.5 million or negative $0.04 per basic share which was also better than our guidance and an improvement from a year ago net loss of negative $3.1 million or negative $0.10 per share. On a GAAP basis our net loss was negative $12.9 million also better than our guidance range. Turning to our balance sheet. We ended the quarter with $199.1 million in cash cash equivalents restricted cash and short-term investments compared to $241.8 million at the end of the second quarter primarily due to cash used to complete our acquisition of NC4 at the end of the quarter. Total deferred revenue was $116.4 million at the end of the quarter an increase of 31% from a year ago. As we have noted on almost every 1 of our public earnings calls our deferred revenue balance at the end of any given quarter can vary due to a number of factors including the timing of significant new contracts. As such deferred revenue is not always a meaningful indicator of the underlying momentum in our business from a quarterly perspective though we believe its upward trajectory is directionally relevant on a longer-term basis. On the last day of the quarter we completed the final elements of our NC4 acquisition. Total consideration was $84.5 million made up of $51.7 million in cash and approximately 321000 shares of our common stock.
Now that we've closed the acquisition of NC4 and are well down the path of rightsizing and integrating that business we are updating our expectations for the revenue contribution from NC4 this year to be approximately $4.5 million. While we will provide detailed guidance on 2020 in our fourth quarter call for modeling purposes we would estimate a revenue contribution of approximately $10 million to $12 million for NC4 next year after considering the purchase accounting impact on acquired deferred revenue as well as the impact of rightsizing and integrating the business. We continue to expect NC4 will be accretive to non-GAAP financial results within 12 months. Now let me turn to our outlook for the fourth quarter and the year. Given our better-than-expected third quarter performance and continued momentum entering the fourth quarter we are increasing our full year outlook. For the fourth quarter we anticipate revenue of between $56.1 million and $56.4 million representing growth of 34% to 35%. We anticipate positive adjusted EBITDA of between $4.9 million and $5.2 million. This level of positive adjusted EBITDA illustrates our overall commitment to a balanced approach of mid-30s revenue growth comprised of organic and M&A activities mirrored by a thoughtful execution toward improved profitability. We anticipate non-GAAP net income of between $1.3 million and $1.6 million or income of between $0.04 and $0.05 per share based on 34 million basic weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $11.1 million for the fourth quarter.
For the full year we are increasing our revenue guidance to a range of $199.9 million to $200.2 million representing growth of 36% based on our strong third quarter performance continued momentum and contribution from NC4. From a profitability perspective we are increasing our adjusted EBITDA guidance to a range of $5.0 million to $5.3 million a nearly $8 million improvement from 2018. We now expect a non-GAAP net loss of between negative $7.3 million and negative $7.0 million for the full year 2019 or between negative 22% and negative $0.21 per share based on 33 million basic weighted average shares outstanding. This guidance assumes estimated stock-based compensation expenses of approximately $35.2 million for the year. In summary we are pleased to again deliver a financial performance that exceeded our guidance ranges and we believe we are entering the fourth quarter with strong business momentum across the board. We are optimistic that this momentum will carry through the quarter and that we will enter 2020 from a position of strength as we further extend our leadership in the multibillion-dollar market for Critical Event Management.
Now operator we'd like to turn the call for questions.
Questions and Answers:
Operator
Sure, sir. [Operator Instructions] Our first question comes from the line of Brad Zelnick with Credit Suisse. Your line is now open.
Bhavin Shah -- Credit Suisse -- Analyst
Thanks. This is Bhavin on for Brad. Congrats on a good quarter guys. David, I just wanted to dive into some of your recent success in state and country wins. What are the factors driving your success here? And has the competitive landscape changed at all for these kind of contracts?
David Meredith -- Chief Executive Officer
Thanks, Bhav. It's a great question. We're very bullish about the prospects in this space. When you look at the total addressable market as much success as we've had, there's still a lot of states in a lot of countries out there for us to go and win. We do think and I've been talking about it, since I joined that we want to have more routes to market. We don't want to be just reliant on a direct sales strategy. We want to have direct sales and we want to have indirect channel partners that will help us and that's particularly important when you're doing very large deals at the country level at the state level, where it maybe bundled in with other types of business in a much larger contract where you really have to go with partners, large system integrators companies like Atos, who we partnered with to win the California deal.
So I think the strategy of having multiple routes to market, it's going to better position us for more of these big deals. At the countrywide level, you see more regulation and standards. So the EU is mandating that the EU countries have to put these types of solutions in place. If you go to India, you'll see the coastal states are required now because of cyclones. And so you're just seeing more and more momentum there, and we have an opportunity because we're one of the early companies that have scale with four countries up and operational in Europe. No one else has that. Multiple states in India operational and now we're adding other countries. I think we're well positioned, a lot of people want to come and find out how we've been doing it, how did we do the implementations, what can they learn from us. So I think it puts us in a position as a thought leader, and a trusted advisor to help these other countries and states figure out how to move forward.
Bhavin Shah -- Credit Suisse -- Analyst
Thanks. That's helpful and you kind of answered some of my follow-up. But can you just elaborate on the plan to leverage more of the channel? How do you kind of see the relationship between a direct and indirect method going forward? And how much can be driven by the channel long-term?
David Meredith -- Chief Executive Officer
Yeah. It's a great question. So there's different types of partnerships, I think historically we've had good success as an OEM model with International SOS. We think there's potential to work with large system integrators on a global basis for some of these big particularly state and local countrywide deals. So we're reaching out and having discussions. And I think a lot of people have taken notice on the California deal and approaching us wanting to work with us.So we'll -- I don't think we have more news to report on that now. But we feel good about the ability to move forward and develop more of those partnerships and make them effective. And also you might notice that we added Vernon Irvin, as our Chief Revenue Officer this quarter. I think Vernon's got a lot of good experience understands how to do this and is already making an impact there.
Bhavin Shah -- Credit Suisse -- Analyst
Thanks again, guys.
David Meredith -- Chief Executive Officer
Thank you.
Operator
Our next question comes from the line of Sterling Auty with JPMorgan. Your line is now open.
Sterling Auty -- JP Morgan -- Analyst
Yeah. Thanks. Hi, guys. Let's follow-on that last thought there David. In terms of Vernon, can you maybe highlight any changes to either people process or other items that he's already effectuated since coming on board?
David Meredith -- Chief Executive Officer
Yeah. Thanks Sterling. So, I think three areas of focus in terms of things we want to emphasize more going forward. One is the whole channel piece, and we're bringing on some additional expertise around that and getting that ramped up. Second one is really continuing the enterprise sales transition that Jamie's been talking about for the past several quarters, which past leadership has been evolving. And so with that, we want to move -- continue to move up market with the Fortune 1000 and into the C-suite; and then also when you talk about the countrywide deals you win the country, but then you also go and win the carriers in that country. And so Vernon's got good experience and good global network of relationships around the carrier space, which is going to be helpful to us as we do these big countrywide deals.
Sterling Auty -- JP Morgan -- Analyst
Perfect. And then one follow-up Patrick for you. Last quarter, I think there was the overreaction to the one side on billings and I heed your comment around deferred revenue. But just to kind of get out there in front of it for this quarter the big upside at least relative to what we were thinking on both deferred revenue and billings any commentary that you can give in terms of maybe what portion of that just came from invoicing things that didn't get invoiced last quarter versus the strength of bookings in the quarter?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Yes. Thanks, Sterling. First, don't overreact. We'll repeat that mantra. And look we had a great quarter. We continue to cite lumpiness in those figures where in particular in this one, we've signed a large deal with a channel partner. We still have the large countrywide deals that we've signed recently. And some of these things hit that metric and some of them don't. So there'll be more to come as we go quarter after quarter. But again, don't look at any one individual quarter and overreact to it please.
Sterling Auty -- JP Morgan -- Analyst
Got it. Thank you.
Operator
Your next question comes from the line of Bhavan Suri with William Blair. Your line is now open.
Matthew Stotler -- William Blair -- Analyst
Hey, this is Matt Stotler on for Bhavan. Thanks for taking our questions and solid results here. So, I guess, first, we'd love to dig into the federal market a little bit and what you saw in the quarter. Just specifically around how the timing of the federal fiscal year-end impacted the spending in deal flow that you saw.
David Meredith -- Chief Executive Officer
Thanks, Matt. Yes. So for the quarter, we had a really good number of new logos in the federal space and I mentioned them in my prepared remarks. We also had our first CEM suite customer. So we continue to get pulled into markets where we haven't really formally launched CEM yet. So we feel like that was really good progress. Definitely, as you mentioned, Q3 is an important end of fiscal year quarter in the federal space and so that probably contributed to some of those new logos that we're able to pull in.
Matthew Stotler -- William Blair -- Analyst
Right, right. That's helpful. Okay. And then second question, would love to get an update on Crisis Management. You mentioned a couple of times in the prepared remarks, but you've previously described that as a potential killer app, if you will, for CEM. So what have you seen in terms of early customer feedback and traction there? And any kind of lessons you're learning on that front. Thank you.
David Meredith -- Chief Executive Officer
Yes. So, the Crisis Management rollout's gone very well. We're getting good wins. We've got some -- we continue to get some really nice logos there, cross-sell, up-sell, in some cases we're able to lead with it. So we feel like it's a really good fit with the rest of the suite and we're very happy with the customer feedback. As you may know, we had a previous acquisition where we had a similar product called Crisis Commander, so we've been able to learn over the years and we think what we have is best-in-class right now and we feel good about it. So we just continue to roll it out and execute on our go-to-market plans, but so far so good.
Matthew Stotler -- William Blair -- Analyst
Got it. Thanks guys. Good quarter.
David Meredith -- Chief Executive Officer
Thank you.
Operator
Your next question comes from the line of Scott Berg with Needham. Your line is now open.
Scott Berg -- Needham -- Analyst
Hi, everyone. Congrats on a really good quarter. Thanks for taking my questions. Patrick, I wanted to continue on Sterling's line of questioning on the housekeeping first. In terms of contributions from NC4 in the quarter, I believe, you said it was roughly $2 million of revenue. But any color on the impact to billings at all in the quarter?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Scott, my favorite metric. No as we said, there's the revenue contribution within the upcoming 10-Q, there'll be more detail in terms of deferred, but you also would have seen some of that in a recently filed 8-K for the legacy business. So we would just say that we're really thrilled with the acquisition. It's meeting our strategic objectives. And as we integrate and right-size that business, which will continue to happen through Q4 and as we head into next year, we're very excited about the contributions that it has, not just financially but, more importantly, strategically.
Scott Berg -- Needham -- Analyst
Got it. Well, I'll ask you a much more exciting question then. This is probably for Jamie or for David is, now that you've won a couple of countrywide deals, the large one in the quarter you had Australia, you have four in Europe. What are your primary takeaways on those deals? And I ask more the question as you go forward, more in earnest to whether it's in Europe or some of those EU mandates or others. But how can you take those learnings to better capitalize and win the lion's share of the business coming from those segments? Thank you.
David Meredith -- Chief Executive Officer
Yes. That's a great question. Thanks Scott. In fact, we all flew over to Europe and spent some time together kind of updating our plans in this area and we're pretty excited about it. So I think, it touches on all aspects of our strategy. So from a product strategy perspective, we believe that we've got the most comprehensive platform approach that is going to meet the needs and some of the recent industry sort of guidelines that have come out, continue to reinforce why our solution is the right solution for these countries. So, for example, if you want to reach all of your population versus most of your population, that's our solution. If you want to be able to have a two-way conversation versus a one-time blast and be able to leverage different technologies and different modalities to get to the citizens and the tourists over both the beginning, pre-event, the whole life cycle is a critical event, so pre-event during the event and after the event.
So if you look across, we believe we have a very comprehensive best-in-class solution around how to do these population deals. We're particularly excited about the potential to take what we've learned around building ecosystems and having a network effect at the state level for a regional resiliency model. So if you look at the state of Florida where we've been able to deliver hundreds of public and private institutions as part of our ecosystem following a statewide win, we want to repeat that same type of success at the country level. So we're excited about our ability to continue to add value, even after winning the initial deal. So all that being said, this is going to start to get more intense, I think, next year and into the following year as the mandate gets closer and closer. So we're hiring staff and putting together our marketing plans and creating thought leadership pieces and talking to the necessary people to try to position ourselves well to maintain our leadership position in the space. With that, I'll turn it over to Jamie. He might have a comment to add as well.
Jaime Ellertson -- Executive Chairman
Yes. Thanks, David. Scott, I'd make a couple of quick comments that tie some of the questions together here in the thematic, which is, I was surprised David didn't start off quoting that well-known line from the song, we want them all. Because the way it has worked builds on our momentum. And as you can imagine, now that we're the only vendor worldwide globally that has four of these population countrywide warning or alerting solutions, one, and we are announcing new wins, not only Australia, new wins with the telcos as they roll out further in Singapore, but also the most recent one, which closed just after Q4, you see the momentum building, not only in the EU, but worldwide. We'd make the same comment in North America as David did. We already got three of the four largest states. So in this business we've often said, it's your reference ability, your ability to deliver that is the final overwhelming factor, because sometimes a lot of the technology is similar.
And in our case, we have more experience and more success behind us proven we can deliver. So I think that's going to be-that learning experience through all these different wins both in the large state wins, trickling into federal and state and local the network effect North America as well as what David said with the four wins in Europe and now the multiple wins outside of Europe, which you've heard no one else announce like us puts us in a great position to take that learning and move forward. And I might add to tie the final piece together that the majority of that -- those customers including the most recent ones have not been billed, so they're not in deferred yet because some of them have like the recent countrywide win had just been announced just finished and formally contractually in early Q4 and certainly have not gone into revenue yet.
Scott Berg -- Needham -- Analyst
Got it. Thanks. Super helpful. Thanks for taking the question, guys.
Jaime Ellertson -- Executive Chairman
Thank you.
Operator
Your next question comes from the line of Brian Peterson with Raymond James. Your line is now open.
Kevin -- Raymond James -- Analyst
Hi, guys. Kevin here on for Brian. Thanks for taking my call. Wanted to also ask about your deal pipeline in the EU. I understand the decisions there being made now at a countrywide level. But we've also seen some new wins announced for you at more of a local or regional level. So I'm just curious how you're seeing your overall international pipeline evolve as we start to get closer to the EU deadline.
David Meredith -- Chief Executive Officer
Thanks Kevin. Appreciate the question. We're very excited about what's happening internationally. I mean, we continue to see really strong growth and we're hiring additional salespeople. We're building out the team and we're very optimistic about continuing to drive penetration in those markets. Remember we haven't even launched -- we haven't even formally launched CEM in Europe yet, and we're already getting pulled into conversations with customers. So this is one of the things we'll be focused on as a strategic imperative for 2020 is to do our big grand opening of CEM in Europe and we're excited about what we think that will bring for us.
Kevin -- Raymond James -- Analyst
Got it. And then just related to the state contract in California. I'm curious how -- I guess you see that ramping over the near term. And are there any impacts we should be mindful of as it relates to your existing public sector customers in the state going forward?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Well, so this is Patrick. From a financial standpoint that will ramp slowly over time. It's -- we're very excited to be a meaningful part of the solution for the state of California and all the citizens there. And as the initial software and service that were procured get up and running. We'll look for opportunities to continue to add value to that over time. So there'll be more to come there.
Scott Berg -- Needham -- Analyst
Thanks guys.
David Meredith -- Chief Executive Officer
Yeah, I think if our experience in Florida is an indication when you have the state the different entities within the state want to do more business with you, and we expect that same type of equation will work when you get the country, you should be able to get the states and the cities and the universities and the healthcare organizations and the corporations. So we're excited about our ability to do more in California.
Operator
Your next question comes from the line of Tom Roderick with Stifel. Your line is now open.
Tom Roderick -- Stifel -- Analyst
Hi. Thank you for taking my questions. So I wanted to follow-up on the last bit of commentary just around CEM expanding into Europe. You've had CEM out in the marketplace for a little over a year now. It's had some real nice success in the U.S. Can you talk about some of the challenges or limitations to-date that you've solved with respect to getting that product into local European markets? Were there localization efforts? Do you feel like you've had good success hiring net new sales reps? Or is this a function of training? Talk about what you've had to do to prepare the European go-to-market for CEM. And should we expect that to have sort of similar traction that we've seen in the U.S.?
David Meredith -- Chief Executive Officer
Yes. I wouldn't say, it's so much a problem. Thanks for the question. It's just sort of a normal set of requirements when you're internationalizing a platform. You've got various data governance regulations that require you to store data in certain places. And we had a plan that we've been working against, where now we've got data contact stores for VCC and that was a prerequisite and other internationalization requirements that we've been building in. So we're moving against the plan that I think we've always talked about. So there haven't been any big surprises there. I think this is a new and expanding category. It is generating quite a bit of interest. And as unfortunately the way the world's going, there's just more and more awareness of the need for these types of solutions. So we do get a lot of inbound interest, and we're able to talk about our experience with the initial customers in North America, and there's a lot of interest how are they doing it what are the best practices. So, people are looking for us to help guide them that way. And so we think we're well positioned to take advantage of that.
Tom Roderick -- Stifel -- Analyst
Excellent. Perfect. And then a follow-on question for you just in terms of the NC4 acquisition. You made multiple mentions to sort of rightsizing that business. And I guess if we looked at the 8-K with the financials, this was about an $18 million business when you brought it over. Can you just help us understand when you talk about rightsizing, what pieces of the business are not coming over to you, and then what areas of the risk intelligence solution set market do you want to invest more money in? Do you see a bigger opportunity going forward?
David Meredith -- Chief Executive Officer
Yeah. So, thanks again for the question. So as we unpack that acquisition and we integrate it, we're focused on the strategic value of it. There are great folks that come with the business and great product. And some of those fit very seamlessly into what we do. There are other aspects of the business that may or may not get discontinued over time if we don't perceive the same degree of strategic value. So between the haircut to deferred revenue and the -- when I say rightsizing, really optimizing for the strategic value of the business, we anticipate that it'll be a bit smaller than what you might have seen in financials that reflect the past. So we encourage you to think of it as a $10 million to $12 million revenue contribution going forward and that's really direct from the business. We think of it as a really key and core part of our CEM go-to-market going forward.
Tom Roderick -- Stifel -- Analyst
Excellent. Thank you guys. Nice job.
Jaime Ellertson -- Executive Chairman
Thanks.
David Meredith -- Chief Executive Officer
Thank you.
Operator
Your next question comes from the line of Brad Sills with Bank of America Merrill Lynch. Your line is now open.
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Great. Hey, guys thanks for taking my question. I wanted to ask about the effort to sell to the telcos. Once you've won a country deal, I know it's early with Australia but maybe just an update on the dialogue you've had with some of the telcos where you've had some early progress with country wins?
Jaime Ellertson -- Executive Chairman
Yeah, it's a fair question Brad. I mean we -- I guess what we'd do is just point you to factual history. So Singapore we got in and we won one telco, and then a second telco and then we're able to follow over the next year at -- finish the end of last year. And then over the next year we were able to add two more of the telcos, meaning we had 100% market share effectively in Singapore and its double the size of the overall relationship. Generally speaking, we're targeting two or three of the top whatever there is in a country. And we feel when you get three, you get 80%, 85% of all consumers within a country. Most on as large as the U.S. say as the European countries. There's generally three. And so that's what we're targeting. But we generally will enter if the government has edict it, we'll win all telcos or some of them may have an existing platform cell broadcast SMS capability, and therefore, we'll integrate them with our front-end for the government as well as the back end for those telcos who do not have a solution, again using our existing history in Australia, the leading player, it's Telstra they have a back end.
But now after winning that opportunity, I think all three telcos are actually looking at purchasing a new back end to support the Population Alerting capability there. So we get in typically with the government and sell into A -- or two telcos and then we're trying to get all of the telcos eventually and we've had a pretty good track record thus far of being able to close with just one of the major opportunity the additional telcos. That additional sales revenue can often double the size of the deal that we announced day 1.
Brad Sills -- Bank of America Merrill Lynch -- Analyst
That's great. Thanks Jamie. And then one more if I may just on state deals. Could you remind us how many states do you have already signed? And what does the pipeline look? Maybe are there certain regions in the U.S. where you're further along with states? Any update on just the effort to win more states? Thanks again.
Jaime Ellertson -- Executive Chairman
I mean, you probably know we've said it forever it's -- we count Washington D.C. and the surrounding area as probably bigger than the state because it's 11, 12, 15 metropolitan counties around -- in the Washington Capital region. NCR national capital region, excuse me. And then, of course, we have the state of Florida. We have the state of Connecticut. We have the state of California now. We have Vermont and we have New York, one of our largest. So five, six is the number depending on how you count things. Leaving a lot of room as David said in his prepared remarks for future success there.
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Thanks Jamie.
Jaime Ellertson -- Executive Chairman
Thank you.
David Meredith -- Chief Executive Officer
Thank you.
Operator
Your next question comes from the line of Eric Lemus with SunTrust Robinson Humphrey. Your line is now open.
Eric Lemus -- SunTrust Robinson Humphrey -- Analyst
Hey guys, thanks for taking the question and really nice quarter. It was nice to hear that the federal government was the strong in the quarter. And in particular it was nice to hear you signed your first CEM customer. Now when we look at CEM and federal, it's been talked about before it's more so a corporate product and does this early indication with the demand pull from this federal customer CEM gives you more confidence to get more aggressive in federal with CEM? And if so is that more so a direct selling effort where you can go through partners to sell CEM in federal?
David Meredith -- Chief Executive Officer
Yeah, it's a great question. So we're excited about the fact that we continue to get pulled into markets and verticals where we're not focused at this yet with the CEM suite. I think all of these organizations if you take a step back and look at what we do, our ability to put together the threat data and the risk data and curate through all kinds of signals to get rid of the false positives and the false negatives and shorten that time to know that something happened that can impact assets, people, your brand, operations, supply chain that you care about, and then the ability to digitize and automate and orchestrate the response to that in a way that's very effective and manage all the communications and the collaboration and all the analytics that surrounds all that data.
We find that everybody needs that. I mean the public sector needs it. The private sector needs it. And so the CEM suite is really tying all that together. So we do think it'll continue to be more interest in terms of how we're prioritizing it. We'll continue to take it slowly in the federal space. And really I think generally speaking the federal space it's going to be expanding our routes to market, expanding our ability to engage with prospective customers. And I think there's going to be a good appetite for all the products and solutions that we've got.
Eric Lemus -- SunTrust Robinson Humphrey -- Analyst
Great. Thanks. Nice job.
David Meredith -- Chief Executive Officer
Thank you.
Jaime Ellertson -- Executive Chairman
Thank you.
Operator
Your next question comes from the line of Will Power with Baird. Your line is now open.
Charlie Ehrlich -- Baird -- Analyst
Hey thanks for taking the question. This is actually Charlie Ehrlich on for Will. Could you help us understand the revenue flow-through associated with some of this large state and country wins? Jamie you mentioned earlier that some of the large state wins this quarter haven't hit deferred revenue yet. So what's the normal time line or cadence from booking a deal and then it hits deferred revenue? And then when can we start to see revenue hit the income statement?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
So this is Patrick. Thank you for the question. These are -- they are large deals and they tend to have a number of different parties that participate in them. And so the initial revenue that we see coming from those tends to be focused entirely on implementation and services. And that can take a while. These, as you've heard earlier on the call and in previous conversations, there could be multiple telcos involved. There's a government involved. And so in one of the deals that we won in the past that could take upwards of 12 months of services to get these implemented. Then when we turn these on there'll be license revenue. So really this is a story that's building for 2020 revenue. And then as we win them all as Jamie said earlier in the EU then we hope that that'll be a really a revenue story for 2021, 2022. So it takes a while to play out.
Charlie Ehrlich -- Baird -- Analyst
Great. That's very helpful. Thanks for answering the question and congrats.
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Thank you.
David Meredith -- Chief Executive Officer
Thank you.
Jaime Ellertson -- Executive Chairman
Thanks.
Operator
Your next question comes from the line of Ryan MacWilliams with Stephens. Your line is now open.
Ryan MacWilliams -- Stephens -- Analyst
Hey, guys. Congrats on the quarter. Double-clicking again on the EU Public Warning opportunity. And Patrick you may have just mentioned it, but in terms of -- I know it's still early but on the implementation side, could there be any significant revenues from a Public Warning deal either from the front end or the back end?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Yes, yes there could. As we've spoken about over the past probably a few quarters, when we acquired UMS, a lot of their deals that were in slides were not necessarily written with revenue recognition in mind. They were written to win the deal and then recognize whatever revenue comes with it.And so as a result, some of those were really -- you end up structuring those as and accounting for them as on-prem perpetual licenses. And so there are some where you can end up having a pop in the license revenue and that ultimately gets turned on and there are others where we'll be able to recognize them ratably. And of course, we strongly prefer the latter bucket. So as we go here and we're implementing, it is possible to turn on components of licenses and to whatever extent that those are accounted for as perpetual then those will pop quickly but there hasn't been much of that like I said, as we zoom out and we look at this entire Public Warning opportunity, we expect to see increasing amounts of revenue as we head into 2020 and beyond.
Ryan MacWilliams -- Stephens -- Analyst
Good. Thanks again for taking the question.
Operator
Your next question comes from the line of Mike Latimore with Northland Capital Markets. Your line is now open.
Mike Latimore -- Northland Capital Markets -- Analyst
Hi. This is [Indecipherable] for Mike Latimore. How much bigger is the California deal than your external largest statewide deal?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
We don't talk about they're kind of sub
Jaime Ellertson -- Executive Chairman
I mean, they're public deals, so you guys have done the research in the past. And the state of Florida deal publicly as exposed as it's not the total size but it's publicly exposed as roughly $3 million $3.5 million. And the California deal is yet again almost 50% larger than that at almost $5 million. So that's not always the total deal because they grow. As we discussed and mentioned last quarterm we sold Resident Connection in Q3, yes to the state of Florida that grew the relationship and we expect to be able to cross-sell and up-sell substantial, additional business in the state of California but the initial contracts were in the $3 million and $5 million category for those two states, respectively and that's public information you can see in the public bid documentation.
David Meredith -- Chief Executive Officer
Yes that's the annual number for the five-year contract where you can extend it to 10 years. So total contract value 5% to 6%.
Mike Latimore -- Northland Capital Markets -- Analyst
Okay. So just a follow-up on this one. Could you comment generally on your average deal size and the length of the contract?
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Well average deal sizes in general continue to be up into the right when you look at them over time. So we're up to $75,000 on a trailing 12-month basis. Years ago that was $30,000. So we are optimizing the model first and foremost for continuing to expand our value proposition and sell larger deals with multiple products, higher and wider within organizations and you see with our performance to date and all the metrics that describe it. You see that we continue to make progress on that front.
Mike Latimore -- Northland Capital Markets -- Analyst
Thank you.
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Thank you.
Operator
We have no further question at this time. I will now turn the call back -- over back to Mr. David Meredith, our CEO for a closing remark.
David Meredith -- Chief Executive Officer
Yes, thank you everyone for joining. I'm really happy to be at Everbridge. It's a great team, great mission, keep people safe and businesses running and leading technology. So look forward to talking to you next quarter.
Operator
[Operator Closing Remarks]
Duration: 62 minutes
Call participants:
Patrick Brickley -- Senior Vice President and Chief Financial Officer
Jaime Ellertson -- Executive Chairman
David Meredith -- Chief Executive Officer
Bhavin Shah -- Credit Suisse -- Analyst
Sterling Auty -- JP Morgan -- Analyst
Matthew Stotler -- William Blair -- Analyst
Scott Berg -- Needham -- Analyst
Kevin -- Raymond James -- Analyst
Tom Roderick -- Stifel -- Analyst
Brad Sills -- Bank of America Merrill Lynch -- Analyst
Eric Lemus -- SunTrust Robinson Humphrey -- Analyst
Charlie Ehrlich -- Baird -- Analyst
Ryan MacWilliams -- Stephens -- Analyst
Mike Latimore -- Northland Capital Markets -- Analyst
