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Everbridge, Inc. (NASDAQ:EVBG)
Q4 2019 Earnings Call
Feb 18, 2020, 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 the Everbridge Fourth Quarter 2019 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I'd now like to hand the conference over to your speaker today, Mr. Patrick Brickley, Chief Financial Officer. Please go ahead, sir.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thank you. Good afternoon, and welcome to Everbridge's earnings conference call for the fourth quarter of 2019. This is Patrick Brickley, Senior Vice President and Chief Financial Officer of Everbridge. With me on the call today are Jaime Ellertson, Executive Chairman; and David Meredith, CEO.

After the market closed today, we issued a press release with details regarding our fourth quarter and full year results, which can be accessed on the Investor Relations section of our website at ir.everbridge.com. This call is being recorded, and a replay will be available on our IR website following the conclusion of the call.

During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. For 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-K and 10-Q 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 Jaime and David for their prepared remarks.

Jaime Ellertson -- Executive Chairman

Thanks, Patrick, and thanks to all of those joining our fourth quarter 2019 earnings call today. We had an excellent fourth quarter with really strong performances across our business, resulting in our best year ever in 2019. Growing demand for our core Critical Event Management suite combined with the success across all of our key market segments and geographies are a strong validation of our strategy and our business overall. The momentum we exited in 2019, which sets our business up for an even better performance in 2020. Today, I'll make a few summary comments on the business as well as the continued execution of our plan. Then I'll pass the call to David and Patrick for details on Q4, and the full-year performance as well as our outlook for 2020.

And first, our business mission is to keep people safe and businesses running during the most critical and impactful events. One such critical event affecting millions of people and thousands of businesses globally is the coronavirus. This virus has already taken the lives of more than a thousand people, surpassing the impact of SARS virus in 2003. Let me say, our hearts go out to all those affected, and we at Everbridge are making every effort to help both the public and private entities mitigate the impact of this large scale event. We've already supported hundreds of our customers across multiple countries who are trying to mitigate the impact of the virus, including millions of communications to employees across the globe. During events such as this as well as other natural or man-made disasters that occur on a regular basis, C-Level Executives and Board of Directors are concerned about precisely the type of issues that our Critical Event Management or CEM suite helps mitigate and safeguard against. In the case of coronavirus, organizations need to know who has been in an affected area. How do they avoid possible infection of their organization? How was the event impacting the supply chain? And how can they plan to avoid business disruption and keep their employee population safe?

Specific examples of our efforts include one of the largest public safety customers using Everbridge to provide CDC guidance to EMS and 911 centers to ensure proper procedures for triaging the possible virus spread. Our corporate customers are using our Safety Connection solution, in CEM, to determine the location of employees, both physically located in as well as employees who have or in the near future, maybe traveling to an infected area, leveraging our Visual Command Centers, coronavirus speed to correlate their assets against the spread of the virus as well as our Crisis Management solution to evacuate employees or implement safety procedures to protect people and operations. Overall, we saw a steadily growing demand for our CEM throughout 2019 with a further spike in demand in Q4, enabling us to exceed all of our related key metrics. We started the year with the objective of further penetrating the Population Alerting market, including ANAB Certification, IT Alerting and Public Warning, as well as expansion of our CEM markets, launching new products to further differentiate and broaden our suite. We ended the year having over-delivered in each of these areas.

We broadened our CEM suite with the introduction of our Crisis Management solution and have already seen strong demand and cross-selling trends. Additionally, we closed the acquisition of NC4, which dramatically expanded our risk data offerings and help drive Q4 related revenues to record levels. And of course, our core Mass Notification solution continues to lead the market. On top of all this success, we want to continue to stress our beliefs that we are just getting started with our disruption of the physical security, IT and IoT marketplaces.

Our momentum sets us up to further penetrate these multi-billion-dollar markets in 2020. We expect to begin to roll-out our CEM outside of the corporate market in North America this year. And as we've described, we've already seen pull for CEM into other markets like government as well as other geographies, such as Asia. In Public Warning, we entered 2020, having previously closed large state deals like California, as well as a number of recent countrywide deals in both Asia and the Americas. Our leadership position, Population Alerting positions us well to support the European nations, who will be evaluating their options to comply with the new EU requirements in the coming years. And of course, we expect to continue to penetrate in the markets for Mass Notification, IT Alerting and our broader suite.

Finally, we continue to grow our overall business as we successfully added hundreds of new employees in 2019, including the very important appointment of a new CEO. I believe our Q4 and 2019 results illustrate the success of our Senior Executive transition. In summary, we are very satisfied with our 2019 results and even more excited with a large opportunity in front of us in 2020 and beyond.

Now, I'll pass the call over to David to provide some details on Q4 and full-year performance and to set the stage for how our momentum will help us continue to drive our growth as we look ahead. David?

David Meredith -- Chief Executive Officer

Thank you, Jaime. I am pleased by the strong performance that exceeded our guidance on both the top and bottom lines, and I am impressed by our team's performance in achieving these results. Our success in the marketplace reflects investments in our teams to broaden and further enhance our product portfolio to bring these products to market and to support our customer success around the world. With tremendous momentum across our business, we are better positioned than ever to continue the success in 2020 and beyond. As Jaime indicated, we exceeded our financial guidance for the fourth quarter, extending our track record for another quarter.

Revenue was $57.1 million, representing growth of 37% year-over-year. This strong topline result combined with strong operational execution by our team, produced profitability that also exceeded our guidance ranges with adjusted EBITDA coming in at $5.6 million for the quarter.

Our Critical Event Management, or CEM strategy is leading the way for organizations looking to monitor and manage business disruption, coordinate risk intelligence and execute mitigation and recovery plans in order to protect their people, assets, customers and supply chains, eliminate or circumvent costly interruptions and to protect and improve brand reputations. Rapidly growing demand for the adoption of CEM is helping us penetrate leading global organizations and governments, drive higher average selling prices and grow our customer base. At the same time, we continue to sell new products to existing customers, including IT Alerting, Safety Connection and Public Warning. And growth from these newer products continues to be complimented by further adoption of our core Mass Notification solution and what we believe remains an under-penetrated market.

Looking at our fourth quarter performance, our strength was evident in the key metrics that we track. First, we added 173 net new enterprise customers in Q4, which is above the high-end of our historical range, though we continue to target approximately 125 net adds per quarter. We ended the year having crossed the 5,000 mark with 5,024 enterprise customers. As the inventor and leading CEM solution globally, we believe that our continued growth will be fueled not only by our addition of net new customers, but increasingly from the cross and upsell of this very large base of 5,000 plus enterprise customers, 98% of whom have yet to adopt our CEM suite.

During Q4, we signed 58 deals, valued at over a $100,000 per year, up 81% from a year-ago, a record result, and includes the addition of multiple million dollar relationships to our customer roles. We had an exceptional quarter for CEM with a record 17 new CEM customers, almost double our Q3 total, including numerous industry leaders and several named accounts. We ended the year with 76 CEM customers, more than double the 35 we had at the end of 2018. Our strong CEM and other large wins drove our average selling price over the last four quarters to $73,000 in the fourth quarter, up 9% from $67,000 a year-ago. In addition to stellar CEM activity, we closed 128 multi-product deals in the fourth quarter, up 38% from a year-ago, which also contributed to our growth in ASP. And we continue to see contributions to our growth from both newer products and our core products that continue to penetrate key markets with 50% of new and gross sales over the last four quarters coming from new products in Q4.

Our international business continued its recent success and represented 20% of our record Q4 revenue. Our revenue mix by vertical remain relatively consistent in Q4 was 59% from corporate, 29% from local, state and countrywide government, and 12% from healthcare, as our growth remains broad-based. While these metrics all represent continued progress in driving our growth. We want to remind you that these quarterly metrics can fluctuate, especially off of a strong fourth quarter like this one. But our optimism and confidence are clearly substantiated by these metrics.

For the full-year, which reflects longer-term trends, our progress was equally impressive. Total revenue grew 37% for all of 2019 to $200.9 million. We added 41 new CEM customers in 2019 to more than double our CEM customer account from a year-ago to 76, and we closed 139 deals with more than a $100,000, a 34% increase from 104 such transactions a year-ago. This full-year performance demonstrates the strong demand that we are seeing across our entire platform from CEM to newer product additions as well as our core Mass Notification.

Looking at the fourth quarter in a little more detail, our CEM business activity reached a crescendo at the year-end with a record of 17 CEM deals in the fourth quarter, almost 100% more than last quarter, and more than 50% increase from the prior record for the number of CEM deals in a quarter, including a new high watermark with the largest CEM contract size in our history. At our Investor Meeting in June, we outlined how growth in the number of CEM deals could help us more than double our size over the next few years. The record number of deals we saw in Q4 illustrates our ability to drive that kind of growth. Our fourth quarter CEM deals include a number of industry leaders. These included one of the world's largest manufacturers who will deploy the full CEM suite as well as IT Alerting across multiple areas of their business to contribute to their life safety and risk management efforts, including IT, supply chain and business continuity. We also closed CEM deals with one of the world's largest theme park operators, one of the largest American mass media conglomerates, two of the 12 largest banks in the United States, a multinational bio-pharmaceutical company with over $20 billion in revenue and more than 20,000 employees and one of the faster growing Fintech companies with more than 6 million users.

Just to highlight a few of our Q4 CEM wins. While each of these 17 new CEM deals is exciting and significant, an important trend we are seeing is the growing adoption by the industry leaders across a range of industry verticals. And these leaders are increasingly willing to be public in their selection of Everbridge. By publicly selecting the Everbridge CEM platform to help and fulfilling their duty of care, they are able to differentiate themselves to employees, prospects, and partners, while also generating better operational outcomes for investors, supply chains, customers, and the market as a whole. For example, in the fourth quarter, we signed CEM deals with category leaders such as Goldman Sachs, Lowe's, and The Gap. Goldman Sachs, one of the highest profile investment banks in the world, leverages Everbridge to enhance their ability to manage operational risk, business continuity, and employee safety for their people and assets around the globe.

Lowe's, a leading home improvement retailer in the United States with over $70 billion in revenue and more than 300,000 employees added to their Everbridge commitment to also become a CEM customer in the fourth quarter. And The Gap, the largest specialty retailer in America and one of the world's most recognized clothing brands, also extended their relationship to complete their CEM suite to enhance the company's operational resiliency. These organizations will all be able to leverage the broad capabilities of CEM to identify risks and better manage remediation efforts to protect people, assets and brands through a single pane of glass. Johnson Controls, a multinational leader for building technology with over $70 billion in revenue and more than 100,000 employees expanded their relationship with the addition of Visual Command Center and became a CEM customer through an expansion in the fourth quarter.

Other new and gross CEM customers in the quarter included Big Data and Analytics leader Teradata; one of the top five banks in Canada, the Bank of Montreal; leading financial services company, Discover Financial; leading utility, Vistra Energy; and Communications leader, Syniverse, backed by leading private equity firm, the Carlyle Group, who will use CEM to help them protect their global network, reaching billions of people and devices. These deals are significant. Not only do each of the deals represent leaders in their respective vertical categories, but also because of the precedent that is set by them and other industry leaders who are willing to be public about their CEM choice. These organizations include Anthem, one of the largest for-profit managed healthcare companies, CVS Health, Dow, MGM Resorts, Microsoft, Nokia, Tiffany and Walgreens as well as S&P 500 Global Insurance Brokerage, A.J. Gallagher, and the leading storage technology company, Seagate with 45,000 employees. In addition to public entities like the US Department of Labor and the New York Metropolitan Transit Authority, which is the largest transit authority in the United States and the second largest in the world.

With a growing list of blue-chip organizations, who are publicly adopting CEM, we are well positioned to solidify our position as the industry gold standard as other companies in those vertical markets look to the example set by these leaders when choosing a Critical Event Management solution for themselves. We also continue to see momentum with new products, including Public Warning, IT Alerting, Safety Connection, and other applications within the Everbridge platform. For example, in the fourth quarter, we signed a new countrywide win with Peru, who chose Everbridge Public Warning to power their Early Warning Emergency Messaging System and serve their 33 million residents and 4 million annual visitors.

Looking at some other marquee wins in the quarter. AB InBev, the world's largest brewer selected Safety Connection as did DP, one of the largest global energy providers ranked fifth in the Forbes Global 2000. Multinational mass media and entertainment giant, WarnerMedia also expanded their Everbridge suite by adding IT Alerting in the fourth quarter. And of course, momentum with our core Mass Notification remains as strong as ever with a growing number of transactions and larger deal sizes across all of our target markets as well. For example, when one of the largest non-profit healthcare systems in the US decided to upgrade its legacy communication platform, they chose Everbridge.

Our platform is being deployed to protect the organizations 9,000 associates and 1,300 physicians across more than 30 facilities. Similarly, Fortune 100 Multinational Conglomerate shows Everbridge Mass Notification to enhance the safety of their global workforce of over 100,000 employees. And in verticals like the federal marketplace, we saw growing and renewing six-figure relationships like the US Census Bureau and the US Army Corps of Engineers.

From a more operational view, our NC4 acquisition, which brings us enhanced risk data and analytics capabilities has now been fully integrated into our Risk Center solution, helping to further differentiate CEM and other products that leverage Risk Center in the marketplace as well as further establishing Everbridge as the de facto leader in the space. Also important in establishing Everbridge as an industry standard is our partner program, which includes solution partners who help deliver solutions for specific industries, markets and processes.

Integration partners create two way communications with third-party systems and alliance channel partners who continue to drive key wins. In addition, as CEM's position solidifies as an important standard for resiliency with leading companies and governments around the globe, we are building out an integrated ecosystem of global solution providers to support these customers by aggregating over 20,000 risk data elements within CEM to better assess and monitor risk. We are constantly expanding the set, having recently added coronavirus risk data for our customers.

Our CEM ecosystem is also expanding. One of the world's leading risk consulting services organizations for more than four decades, Control Risks, recently announced the formation of a specialized CEM consulting practice to assist customers with expertise around the implementation and management of Critical Event Management. Control Risks new CEM practice will be powered by Everbridge technology and joint customer feedback has already been positive. With, for example, chemical giant Dow, indicating that the alliance allows them to more rapidly assess risk and align teams on planned actions in order to achieve crisis prevention.

Looking ahead to 2020, we expect a strong momentum we have in the market to fuel continued topline growth across all verticals, geographies, and product areas. We have a healthy pipeline of new CEM prospects and customer expansions and look forward to setting new records for CEM in 2020. In addition to continuing to focus on the North American corporate market, we will begin to roll-out CEM to our international salesforce in 2020 as well as continue to push into the healthcare vertical, supported by our recent tuck-in acquisition in the IoT or Internet of Things space. As we saw pull from these markets in 2019, there's strong demand across our ecosystem for this highly differentiated technology and we look forward to beginning to explore these opportunities in 2020.

In the area of Population Alerting, we have demonstrated our global leadership with countrywide deals as well as deals with US States that are larger than many countries. We are leveraging our thought leadership in the EU as member countries look to implement population warning systems to comply with the EU directive. Third-party organizations have also recognized Everbridge's leadership in Population Alerting. The well-respected European Emergency Number Association, commonly known as EENA has been running workshops in Europe to help them evaluate Public Warning systems.

A recent report by EENA recommended that countries operate behind a common user interface and workflow to use multiple channels in order to maximize reach, geographic, specificity and speed. Of course, this is precisely the approach we have taken around the world, including in Europe where we have more countrywide deployments than anyone else. In India, where our platform is protecting tens of millions of people and in North America, where we have been deployed more broadly than anyone else for many years. And speaking of international markets, I'd like to highlight a few of our global wins that are indicative of our continued success in Europe and Asia, including a large multi-product win in Europe with a food and specialty manufacturer, as well as the leading Spanish bake. And in Asia, one of the largest global banks and a leading international professional services firm just to name a few. This segment of our business has been an historic growth engine and we believe the roll-out of our full CEM suite into our international sales team and partner channels combined with the opening of new sales geographies in Europe, the Middle East and Asia mean that our international business will continue to drive meaningful growth for 2020 and beyond. And also in 2020, we'll continue to penetrate the market with our core Mass Notification and our newer products like IT Alerting, Safety Connection and Visual Command Center, while also cross-selling these applications to existing customers as they upgrade and expand the relationships with Everbridge.

Looking beyond our current capabilities, we continue to focus on extending our technology leadership. For example, in 2019, we launched CEM for supply chains which became increasingly relevant with the coronavirus outbreak. Looking forward, we are extending our CEM capabilities across the Internet of Things, or IoT as the number of IoT devices is expected to approach 75 billion by 2025. Our latest technology acquisitions extend our CEM platform to integrate, monitor and manage the rapidly proliferating number of IoT sensors and devices in the corporate environment as well as support our international expansion.

When integrated, our customers will be able to leverage our CEM capabilities to both safeguard IoT connected assets as well as to leverage vast amounts of data in real time from IoT enabled sensors across smart building and safe city initiatives, all while curetting increasingly complex risk data in a coordinated manner with a single pane of glass provided by our Visual Command Center. We will continue to leverage both organic development and tuck-in technology acquisitions to add capabilities such as these as well as other new features that reinforce our competitive differentiation and enable us to further penetrate our multi-billion-dollar market opportunity.

In summary, the fourth quarter was a strong finish to our best year ever. CEM in particular had a breakout year, reflecting a fast pace of adoption and reinforcing our position as the evolving industry standard. Everbridge is better positioned than ever before to continue our track record of growth and success as we continue to distance ourselves from our competitors in the Critical Event Management space.

Now, let me turn the call over to Patrick for more details on our fourth quarter financial performance and our guidance for Q1 and all of 2020. Patrick?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thanks, David. I will review our financial highlights from the fourth quarter and then provide guidance for the first quarter and the full-year. We ended 2019 on a strong note with fourth quarter revenue growth of 37%, above our expectations, leading to a very robust year overall also with 37% growth. Revenue in the fourth quarter was $57.1 million. With the strong execution, we were also able to deliver adjusted EBITDA for the quarter that exceeded our guidance at $5.6 million. Maintaining high customer 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. This is complimented by new customer additions and we saw a very healthy 173 net new enterprise customers in the quarter, who generate fees of $200 per month or more. We ended the year with over 5,000 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 70.3%, up 50 basis points from 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 million, an increase of 21% from year-ago, reflecting our ability to make investments that will enable us to continue generating strong topline growth while also benefiting from scale to produce incremental margin leverage.

Adjusted EBITDA was above guidance at $5.6 million compared to $800,000 in the year-ago period. Net income in the fourth quarter was $1.7 million or $0.05 per diluted share, above the high end of our guidance range and an improvement from our year-ago net loss of $2.8 million or $0.09 per basic and diluted share. On a GAAP basis, our net loss was $13.1 million also better than our guidance range.

Looking at the year as a whole, revenue of $200.9 million increased 37% from 2018 with larger deals, higher ASPs, and more multi-product sales, especially CEM contributing to this growth. Gross margin for the year was 70.4%, fairly consistent with 70.6% a year-ago. Adjusted EBITDA for the year was $5.7 million compared to an adjusted EBITDA loss of $2.7 million a year-ago.

Turning to our balance sheet. We ended the year with $539.7 million in cash, cash equivalents, restricted cash and short-term investments compared to $199.1 million at the end of the third quarter, primarily due to the successful offering of convertible notes in December, which provided net proceeds of approximately $437 million. Free cash flow was an outflow of $1.3 million in the fourth quarter and an outflow of $2.8 million for all of 2019, a notable improvement from an outflow of $6.9 million in 2018.

Total deferred revenue was $133.5 million at the end of the quarter, an increase of 40% from a year-ago. Even when this metric is very strong, we will note again that 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, the change in deferred revenue on a quarterly basis is not always a meaningful indicator of the underlying momentum in our business, though we believe its growth is directionally relevant on a longer-term basis.

Now let me turn to our outlook for first quarter and the year. We ended a record year with a record fourth quarter and considerable momentum, which drives our optimism and confidence in 2020. We are particularly excited about our momentum with CEM, our larger deal sizes and our ability to balance growth from new customers and expansions at existing customers. While topline growth remains our first priority, we continue to focus on improving profitability over the longer-term. While we don't guide to gross margins, we continue to expect improvement on a longer-term basis.

During 2020, we will see a couple of opposing forces as well. We expect to benefit from continued scale in our business, but believe that this will largely be offset by strong gross profit contributions at lower margin from prime contractor arrangement. Combined with continued technology and go-to-market investments that will enable us to capture a large share of the opportunity ahead of us, we expect to again make incremental improvements in adjusted EBITDA and operating and free cash flow in 2020. With that in mind, for the full-year, we expect revenue to be in the range of $260.3 million to $262.3 million, representing growth of 30% to 31%. We anticipate adjusted EBITDA to be in the range of $6 million to $7 million.

We expect non-GAAP net loss of between $26.5 million and $25.5 million or between $0.77 and $0.75 per share based on $34.2 million basic and diluted weighted average shares outstanding. This includes the impact of a large increase in non-cash interest expense related to our convertible debt. This guidance assumes estimated stock-based compensation expenses of approximately $47.4 million for the year. We anticipate the free cash flow will be approximately break-even to slightly positive for the year.

For the first quarter, we anticipate revenue of between $57.5 million and $57.9 million, representing growth of 34% to 35%. We anticipate adjusted EBITDA to be a loss between $5.9 million and $5.5 million. We anticipate a non-GAAP net loss of between $13.3 million and $12.9 million or loss of between $0.39 and $0.40 per share based on $34 million basic and diluted weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $11 million in the first quarter.

In summary, we are pleased to have delivered a record quarter and year and to be entering 2020 better positions than at any other time in our history. We are optimistic and confident that we will be able to continue our track record of delivering high revenue growth with gradually improving profitability and cash flow as we further penetrate the multi-billion-dollar opportunity ahead of us.

Now, operator, we'd like to open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of David Hynes with Canaccord. Your line is now open.

David Hynes -- Canaccord Genuity -- Analyst

Hey, thanks very much. Congrats on the strong results. Maybe we can start with CEM, obviously seen some nice momentum there. I think in the past you've said around half of your CEM customers have come from point solution users that upgrade. Can you just talk generally about what the catalyst is to make that happen? Is it event driven? Is it just about sales persistence in the C-suite? And I guess, if it's the latter, are you focused on training your Mass Notification reps to sell more strategic or is it about bringing in new folks who have experience selling higher in our organization? So any color to help me understand kind of the cadence and strategy there would be helpful.

David Meredith -- Chief Executive Officer

Yeah. Hi, David. This is David Meredith. Thanks for the question. So it really is both sides, and Jaime has talked for several quarters about what we call our enterprise transition, which is transforming our salesforce and being able to sell higher up into the C-suite into larger organizations. And we continue to see really good progress on that front. It's an ongoing journey. We're not at the end yet, but we are seeing improvements. I think a lot of that showed up this quarter. We rolled out a new sales management process, so we have consistency on a global basis for that. And I think we're doing a lot of things that represent best-in-class practices and processes.

In terms of being event driven, there is no question that when you turn on the news every day and you're seeing critical events, showing on there, it raises the awareness level. And one, I think organizations want to keep their people safe. They want to keep their businesses running faster, consistent with our mission.

So the other thing is as we get more and more integrated and more and more operational use cases, not only is it the right thing to do for taking care of their people, it is also a great return on investment for customers. And I think they're seeing more and more of those examples, and more and more of our customers are going out and publicly allowing us to name them and we're doing press releases and there are being references for other customers. So it's really just becoming the standard. I think it's going to get to the point where if you're a Fortune 500 company, you don't have a CEM platform, I think people are going to start to wonder why you're not prepared.

David Hynes -- Canaccord Genuity -- Analyst

Yeah. That makes perfect sense. And then maybe one follow-up just for Patrick on the guidance. The headwinds to gross margins as you kind of engage more strategic partners. Are you thinking that gross margins take a step back a bit this year? Do we just see the margin improvement kind of stall out? Just any framework you're thinking about kind of the expense structure in 2020?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Sure. Thanks for the question. We think in terms of the adjusted EBITDA and cash flow that we will continue to show continued gradual improvement there. In terms of gross margins, we're excited that we're entering this Public Warning opportunity with the ability to sell the entire platform and that enables the opportunity for us to operate as the prime contractor and really own these opportunities from beginning to end. As a result, there could be some compression on our gross margin. You could think of it as more or less just kind of stalling out, perhaps for a little while. There are some puts and takes though and time will tell, we are not anticipating any sort of material decline in them, just some headwinds.

David Hynes -- Canaccord Genuity -- Analyst

Very good. Congrats on the results guys.

David Meredith -- Chief Executive Officer

Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thank you.

Operator

Our next question comes from Bhavan Suri with William Blair. Your line is now open.

Matthew Stotler -- William Blair & Company LLC -- Analyst

Hey guys. This is Matt Stotler on for Bhavan Suri. Congratulations on the quarter. Great quarter, obviously some strong results there. I guess, first, wanted to maybe log another question on guidance. In addition to the thoughts on gross margin here, it looks like we're also seeing some increased investments, so obviously a lot of exciting things going on, we'd love to kind of breakdown on a dollar basis. Where are we seeing those investments if we look forward to 2020? How that breaks out between sales and marketing, research and development, G&A? And then within those line items, what specifically are some of the initiatives that you have in mind?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thanks for the question, Matt. Yeah. So on G&A, I don't get to continue to invest at the same rate of revenue growth, but we will continue to build out the platform, so you'll see that in R&D, we'll continue to build a competitive advantage that's going to benefit us for the long-term. We'll also see that in our adjusted gross margin. Our sales and marketing, you heard David talk a bit about that. We are still continuing to roll-out new programs there and build capacity for future years, so continued investment there. Zooming out, we're really excited about the momentum that we're entering 2020 with, and overall, we do believe that we can continue to drive strong revenue growth while continuing to add to our adjusted EBITDA and increasingly to our operating and free cash flow.

Matthew Stotler -- William Blair & Company LLC -- Analyst

Right, helpful. Okay. And then maybe just one follow-up, kind of looking at the partner strategy here, obviously, it's been a greater focus for you guys over the past six to nine months. You obviously have the California one with Atos as well as the recent announcement with Control Risks. Love to just get updated thoughts on the pipeline regarding your channel relationships, what the market opportunity looks like through those channels versus your direct go-to-market, and how significant the indirect channels could be in terms of contributor revenue over time?

David Meredith -- Chief Executive Officer

Yeah. It's a great question. It's definitely an area of focus that we talked about. It will take time to get to the full potential and what it can be. What we're really looking to do is to add more routes to market. Historically, we've been predominantly focused on direct sales and the company has done an amazing job of driving really significant growth through that one route to market for the most part. And in conjunction with our product strategy, because we're integrated now with almost a hundred other companies with our platform. And that opens itself up to all different types of opportunities, whether its referral deals or OEM deals or other types of partnerships like what we're doing with Control Risks, which we're really excited about.

So we're already seeing some improvement in terms of deal flows coming through. We don't think it's anywhere near where it'll eventually be. And as you said, we had the State of California, which was the largest contract in our company's history that we got through an SI partner. I think as you look at some of these big population warning deals around the world, probably expect to see maybe some similar opportunities like that. And then we're continuing to get progress on the OEM front. And then, again, Control Risks is just a great partner because we do software and they do consulting and they're plugged into most of the big brands around the world and having a -- I don't want to understate that from this earnings call, a major global consultancy that's been leading in this for 45 years has created a CEM practice, consulting practice, that's the first time that's ever happened. So we're seeing the adoption of CEM as a standard with the highest reputation companies, and that only helps us with what we're doing. And I think you're starting to see that with the results we posted in terms of the numbers CEM wins in Q4.

Matthew Stotler -- William Blair & Company LLC -- Analyst

Got it. Thanks for taking the questions.

David Meredith -- Chief Executive Officer

Sure.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

You bet.

Operator

Our next question comes from Terry Tillman with SunTrust Robinson Humphrey. Your line is now open.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Yeah. Hey, Jaime, David and Patrick. Can you all hear me OK?

David Meredith -- Chief Executive Officer

Yes, we can.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Hi, Terry.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Okay. Hey, congrats on the strong sales in the quarter. I guess the first question, and I don't know who this should be for, but don't fight over it. Okay. But in terms of the CEM, and obviously the momentum and as you all call it, a spike in US in fourth quarter, I'm curious how we could see this monetize in international markets? I mean you've obviously gotten learnings in the US, how quickly do you see this ramping in Europe, for example? Because we know now the number of CEM customers you have in the US and we know some of the deal sizes. I'd like to see how quickly this could be replicated in material in the international markets? That's the first question.

David Meredith -- Chief Executive Officer

Well, we've said all along we plan. We have not formally rolled out CEM internationally. We're planning to roll it out to Europe this year in 2020. I can tell you we're already building a funnel of customers that are very interested in it based on what they're seeing from the US and how we've enabled our sales team internationally. So we're pretty excited about it. We'll do a big launch and we think it's going to probably accelerate the growth internationally and I don't think we're ready to put numbers to it, but directionally we're pretty excited about it.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Okay. And maybe the follow-up, Patrick, could you give us a sense or update us on NC4? I think you did give us a range for the expectation in 2020, if I'm not mistaken, $8 million to $10 million, and then anything materiality wise in terms of this IoT acquisition? Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Yeah. So for the IoT acquisition, that's a Q1 event. And it's a technology acquisition. For NC4, we believe that NC4 helps us sell our risk intelligence offerings and any products can leverage it, including CEM. And because NC4 is now fully integrated into risk center and it's not sold separately, it's impossible to attribute a revenue contribution from it alone. So I'd say zooming out, we believe that we're providing guidance that's both realistic and prudent and we're entering the year with a lot of momentum for CEM and otherwise.

Operator

Our next question comes from the line of Ryan MacWilliams with Stephens. Your line is now open.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Hey, guys. Thanks for taking the question. So on the EU directive Public Warning opportunity, I know it's still early an RFPs haven't come out yet, but have you seen an appetite for countries to pursue a hybrid solution for both cell broadcast and location-based SMS? And then if not, are you prioritizing location-based SMS deals over cell broadcast or are you just trying to go after each opportunity?

David Meredith -- Chief Executive Officer

Ryan, this is David. Thanks for that question. Very insightful review. I think our perspective and our positioning is really a platform-based approach, where we believe there's benefits to being able to have a platform that can deliver a location-based SMS and cell broadcast. And then there's other where we feel our proprietary capabilities, we can tie around that as well that only we can provide and that's the message we're taking to the marketplace. And I think that's the message that some of the thought leaders are reflecting as well.

So we're excited about the opportunity to go and win those deals when they start to come. Obviously, we're dealing with a mandate to have it up by June of 2022. So realistically, how soon will we finally get RFI, RFP deals closed implemented. Revenue wise, you're probably talking more 2021 than 2020. But we are seeing activity. We're starting to see RFIs. We're having meetings and discussions and so we think we're very well positioned there. And we are positioning around a platform approach that can deliver all those capabilities. And we've actually delivered hundreds of cell broadcast solutions in other parts of the world. And if you look at what we're doing with some of our existing implementations, we've been the prime and delivered across both. So we think we've got expertise on both. Obviously, with your math, we've got the leading location-based SMS solution as well.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Perfect. And then as I said, a fairly great quarter on the CEM suite side. Of those 5,000 and change enterprise customers today, do you have a sense of how many of these could be a target for CEM? And also besides the corporate space where you've mentioned a lot of great wins, it seems like there's been nice state and local CEM suite wins this year. Can you maybe add some color around how this opportunity could play out in 2020 and how this pipeline will be supported by recent wins like California?

David Meredith -- Chief Executive Officer

Yeah. So in terms of our installed base, I think they're all candidates for upsells. So remember, we've got 10 Software-as-a-Service products and on average our customers are only using two of them. So we'll continue to upsell as far as which ones are likely to be CEM customers. There's two ways to look at it. One is the larger customers are a really good fit because they're managing across multiple countries and that sort of thing. But then on the flip side, our smaller customers, they like to have things automated because they don't have as much staff. So it's really just a different segmentation strategy and how you approach them and how you package up the solution and we have different combinations of what we can sell in a CEM bundle. So we think this is the right product for the right customer segment, right channel, right price. So we're going to continue to develop that and we think that's going to be a really good source of growth on the CEM side.

In terms of other areas for CEM, I think you're going to see us talking more about CEM for public safety, which is expanding into our government space. Remember we're FedRAMP compliant and that's a big deal. Every year we have 325 certifications we have to go through, and most of our competitors don't have that, and that's a halo effect and we continue to add more states and more cities and towns, and so we're getting really good momentum. We had a good year on the state and local side as well, and we think all of that can lend itself toward CEM for public safety. And then as we alluded to earlier, I think extending into some adjacencies around CEM in the IoT space.

When you think about we protect things that you care about, your people, your assets, your customers, supply chain brand. Well, when you've got 75 billion devices that are connected, you've got a lot more assets, you've got to care about and you've got to protect. That lends itself well to what we do. And then the flip side is all of those sensors, whether it's a safe city and you've got cameras all around different types of sensors, the ability to aggregate and correlate all that data, curate through it and figure out where is a critical event? Because at the end of the day, minutes matter, seconds matter with critical events and we just get better and better if we can leverage IoT for that. So I think that's going to play well in the public sector as well as the private sector.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Appreciate the color. Thanks for the questions. Congrats on a good quarter guys.

David Meredith -- Chief Executive Officer

Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thank you.

Operator

Our next question comes from Scott Berg with Needham. Your line is now open.

Scott Berg -- Needham & Company, LLC -- Analyst

Hi, Jaime, David, and Patrick. Congrats on a good quarter. I guess, first question probably for you, David, you hired a new Head of Sales, Vernon in the year, back in September. Outside of the additional push from some of the partners strategies, now that we're into the beginning of the new sales year, are there any other kind of significant changes to the salesforce that are important to note or is it more kind of fine tuning and tweaking?

David Meredith -- Chief Executive Officer

Well, thanks Scott. Thanks for the question. Yeah, Vernon Irvin has come in and really done a fantastic job. I mean he didn't get any ramp up time, but luckily he's seen the movie before and knows what he's doing. And I'm very happy with the results, the numbers he's posted in the last few quarters. There's a bunch of dials that we're tuning, one of the things we've done is we've added a global center of excellence around solution selling, which I think is enabling us to accelerate the speed at which we can get new sales reps productive because they've got a centralized group that can help them with best practices and help support them with big customer opportunities. So we're pretty excited about that group. As I mentioned earlier, we rolled out a whole new standardized kind of best practices processes around sales management and pipeline management and additional reports. And there's a bunch -- Vernon loves programs, so we've got a program around penetrating the rest of the Fortune 1000 and the Global 2000 and other things. So he's putting in place discipline and process and how we drive to grow the numbers. And I think we're happy with the results so far.

Scott Berg -- Needham & Company, LLC -- Analyst

Got it, helpful. And then from a follow-up perspective, probably for Jaime, I think you're still heavily involved in the acquisition strategy of the company, the company that just raised a fair amount of cash. Do you change your views or perspective on maybe what those acquisitions look like this year? They've been product heavy. Don't know if that changes either in size or scale or maybe looking at some customer type acquisitions? Thank you.

Jaime Ellertson -- Executive Chairman

Sure. Well I think increasingly David and Patrick make most of those decisions. I've still sit in that seat, but I hope to be giving that seat up pretty quickly here as we get into the middle of the 2020. But the cash we raised, we feel great about, primary purposes were to retire our existing debt under the previous convert. But we still look at the strategic plan as targeting 30% to 35% growth on an annualized basis. And that's comprised of organic growth plus a couple of percentage points, not much different than what we said historically 3% to 7% from M&A. And as David mentioned in his prepared remarks, we got a small technology kind of people transaction done after the close of the quarter, but in the IoT space, we continue to do things in that space to expand CEM into the literally billions of sensors that are out there both in buildings and in entire cities, and we'll probably continue that exact same strategy, increasingly led by David and Patrick and mildly by myself.

Operator

Our next question comes from Brian Peterson with Raymond James. Your line is now open.

Brian Peterson -- Raymond James & Associates, Inc. -- Analyst

Hi gentlemen. Thanks for taking the question and congrats on the really strong billings number. So just wanted to hit on the CEM success, I'm curious, any change to sales cycles that you've seen or is it still too early days and in terms of that and is it really more about the breadth of opportunities in the discussions that you're having with some of your larger potential customers?

David Meredith -- Chief Executive Officer

Yeah. Thanks Brian. Appreciate that. It's a great question. And one of the things we're trying to do and Vernon's really pushing this is raise our level and this is part of the enterprise transition that we've been doing for several quarters. But starting a conversation with the C-suite as opposed to working our way up. So I will say there were a few deals there where we started discussion with the CEO and from the start of the discussion to the closing of the deal, it all happened in the quarter. And I think some of the sales folks said, that was really fast. Didn't know things could happen that fast. And so yeah, I think as we continue to move up into the C-suite and even into the Board of Directors, because you think about what keeps a Board Member or a CEO up at night, a lot of it is critical events and I think we're seeing that in the news. And again, it raises the awareness and the fact that there's a readymade solution, which is best-in-class and proven and not only provides you that assurance, but also provides real return on investment around some of these operational use cases we're doing more and more with our customers. It's just very compelling to the C-suite. So that's continuing enterprise sales transition and getting better at doing that in a systematic way. And so I think there are opportunities to shorten the cycle. But for a typical deal where we're -- the way we normally go about it, I don't see a whole lot of change from what we've been doing.

Brian Peterson -- Raymond James & Associates, Inc. -- Analyst

Got it. That's good to hear. And Patrick, maybe just one for you, I know the ASPs have been going up pretty significantly. I think they were up 9% year-over-year this quarter. Any help on how to think about that metric maybe over the next few quarters? Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Sure, Brian. Thank you. Yeah, we like the trends there. We expect that that will continue when you zoom out, certainly any individual quarter, it can bounce around a bit. But whether it's continuing to sell large deals, and we did more in 2020, far more in 2019 than we ever have and/or continuing to train the team to be able to sell some of our more strategic products, which sometimes are single product deals. They both contribute to our growth. And so sometimes that mix will bounce around a little bit, but it should continue to be up to the right overall in terms of a trend.

Brian Peterson -- Raymond James & Associates, Inc. -- Analyst

Understood. Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

You bet.

Operator

Our next question comes from Will Power with Baird. Your line is now open.

William Power -- Robert W. Baird & Co. Inc. -- Analyst

Well, great. Thanks. Yeah, I guess maybe a couple of questions. Maybe first stuff for David, I guess you've referenced some of the initial RFIs that you maybe seeing in the EU as respect to that Population Alerting mandate a couple of years from now. I mean, any early color as that what's you're seeing competitively any surprises on that front and are you able to get any real read on how we might think about the size of that opportunity, maybe in reference to some of the additional or existing deals you have on the continent in that area?

And then Patrick, maybe just quickly for you, you talked about prime contractors having an impact on, at least a modest impact on gross margins. How do you think about the lifetime value of those deals? Is it same, better, is a lower sales cost to offset that? Any other color there would be great?

David Meredith -- Chief Executive Officer

Yeah. Thanks Will. In terms of the countrywide population warning deals, it's still pretty early. So to try and say what the deal size and the dollar, it's just -- there's still sort of trying to scope out how they want to tackle the problem. I think the good news is we've done a lot in terms of leaning in on thought leadership and I think our view of what the country should be doing is generally getting adopted. So we're excited about that. And the one thing I'll say that keeps coming up again and again, I think the people making decisions, the one thing is they don't want to make a mistake. They don't want to make the wrong choice and there's a lot of incentives around that.

And I think that positions us well because as the one public company in this space with a strong balance sheet and bench strength and the years of experience and all the references we have, I think we're very well positioned to be the right choice, especially when you factor in our full platform approach to how we're going to solve this for people where they have kind of flexibility to do either cell broadcast or location-based or hybrid combination with additional IP wrapped around it. I think it's a compelling message. That being said, it's still early days and we're dealing with countries and governments and telcos, so that can sometimes take longer than we want it to. And so I think we have to continue to play this out in the coming quarters and we'll get more insights as we go.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

And Will, this is Patrick to answer the second part of your question. We're excited about the opportunity that we hope that winning a countrywide deal will afford us. We're starting to see it in our existing wins. But when you think about network effects and you take what we did in Florida where we didn't have much business when we first won the statewide alerting deal in Florida, and based on the referenceability, based on the sharing of data within the Everbridge network. We've since rolled up over 200 contracts within the State of Florida. We're doing that in the State of New York. We got the state and the city, the MTA, we're working on hospitals, transportation, etc. Now we hope to do that in California and we're taking it to countries. So when we look at the gross margin impacts, which we hope to be able to manage very successfully with the countrywide alerting opportunities, we think that as a much broader opportunity for us that will play out over time.

William Power -- Robert W. Baird & Co. Inc. -- Analyst

Okay, thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

You bet.

Operator

Our next question comes from Tom Roderick with Stifel. Your line is now open.

Thomas Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst

Hey, gentlemen. Thanks for taking my questions. I [Indecipherable] sentiments on a nice finish to the year. Jaime, you led off the script with the discussion on coronavirus and I know it's meant to be sort of an anecdote or one sort of moment in time, but as you seen some of these incidents in the past in your leadership and David chime in here as well from your perspective.

I'd be curious how the conversations with customers evolve? Do they accelerate in light of an event like this? You've got a product in the marketplace that can serve an immediate need. Obviously this is a moment in time, but how are customers reacting to that and that product that's in the marketplace to coronavirus itself actually be a catalyst for earlier deal closing then you might expect. Can you just talk about that at this period of time and also historically how you've seen various incident like this impact the sales environment?

Jaime Ellertson -- Executive Chairman

Yeah. I mean we don't, and David will chime in here because he is intimately involved with large customers that are signing up now and did obviously just sign up in a very strong Q4 for CEM, and across multiple verticals and leadership positions. So none of those companies we mentioned, whether it's a major theme park, a manager who run theme parks in the US and Asia and in Europe or it's a major financial institution that has offices in every one of the countries thus far with a significant outbreak certainly in greater China or one of the largest manufacturers in the world. They all have tens of thousands of people that are affected in real time. They're actually in China or in Singapore where there's now an outbreak, a confirmed outbreak or other countries where there's a spread of the virus.

And when you think of the impact to your company, you first think of people, right, executives who's traveled there recently. Did they go through quarantine when they came back? How do we track all the people? If you've got a 100,000, 50,000, 200,000 employees, how could you possibly manage that without shutting down your business? And that's the safety of executives, now think of the rank and file people. They happen to travel and they travel on a private basis, but come back to an office and then potentially can contaminate an office or shutdown a manufacturing plant because they happen to been to an affected area without something to manage how your assets, the people and things you care about are affected by that growing spread, daily spread of a virus. A number one issue is that it spreads at 4 times the rate of flu, the contingent.

So this rapid spread that concerns people, not necessarily the deaths. And as we said, those are -- our hearts go out to those people, and we think this is a serious issue, no different than other manmade or natural disasters, but it is a great example and that's the life safety portion of it. Now turn to those same companies I just mentioned and think about their supply chain. For that matter, think of all 5,000 of ours or the Fortune 1000. Take a wild guess at what percentage have manufacturing of some critical goods in China, the vast majority without getting into numbers that maybe mind boggling, the vast majority, so they're all affected.

Everyone is going to be impacted by the virus in some way either because the goods that you expect out of production in a region are not coming as fast because factories are closed down or workers are going through, as I heard in one recent case, from a Board member, a four-hour a day testing period every morning. So on an eight-hour day, they're working less than 50% of the time even when a factory is turned back on. Just saw the news half an hour before walking in here. Apple iPhone sales reported to be down 2%. That's a big number directly attributable to coronavirus. So whether it's people in the spread of -- a critical event like this or your business disruption, the supply chain, this is a kind of a poster child for what can happen, and why Board of Directors, C-level officers need to have such a product.

And I think Q4 is a small example, but the opportunity to supply and provide people with a solution that can identify the risk, help them communicate how to stay safe or keep their business running and mitigate the risk, and then in the end follow-up and improve process and procedures and protect the brand is an enormous opportunity for CEM. But I'll let David -- just because that is a big thematic in the news today. I'll let David talk about this too.

David Meredith -- Chief Executive Officer

Yeah. Thanks Jaime. Our mission is to keep people safe and keep businesses running. So this is when we activate. We have made some operational changes. So we've actually formed what we call a rapid response team process. So when there is a major critical event in any part of the world, whether it's a cyclone in Odisha or a Hurricane in Florida, or coronavirus outbreak. We mobilize the team and we were reaching out to our customers, see how can we help, how can we engage with you to do better? So if you look at Hurricane Dorian, we did something like 15 million communications in matter of days and we were taking our risk center, which is partially powered by NC4 and we're lighting up a lot of customers and basically giving them access to that during the hurricane. And what's happened, a lot of those customers came back and said, hey, we really like that. We want to sign up for that data.

Resident Connect, we were asked by the state if we could add millions more people to the contact list and we have a product for that called Resident Connect. It was $0.5 million recurring revenue deal that we got done the week of the hurricane. And they were delighted we could turn it on for them within a matter of a couple of days. So it's a win-win, and we've been responsive. I think on the coronavirus, Patrick talked about, everything Jaime said, I agree wholeheartedly. And having a CEM supply chain solution that we launched this year was very timely given the coronavirus. But Patrick talked about network effects. And when we look at our network of customers, there's a lot of activity and we've already done millions of communications across our customers specifically related to coronavirus and there's just a lot of activity.

We're doing regular webinars and information updates and we've had something like 5 times, the normal amount of executives attending those than what we would normally do for other types of critical events. So we've never seen, since I've been here, not that long, less than a year, but never seen the level of interest across all categories of our customers is what we're seeing with this. And there's a lot of things. We did a press release recently. We've launched a whole new data feeds specifically related to coronavirus. Jaime mentioned how dynamic it is, how rapidly it's moving. So helping our customers better have situational awareness as to where is the virus spreading and where other people and assets and how can they respond. So this is what we're here to do. This is why we exist. And so we take it seriously and we're definitely busy working on it right now.

Thomas Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst

Really good. That's very helpful. Thank you. Patrick, really quick one for you. I know you don't guide to it and I know you kind of steer us away from it. But wondering if you can help us think directionally about how you might -- how we might want to shape the model of our deferred revenues for the year, a couple of years ago it was down sequentially a few percent into the first quarter, last year was up, so it creates a little bit of a tricky compare for the first quarter. Any thoughts on how you might suggest we -- we've modeled out the shape of differs this year? Any thoughts relative to one-time lumpy events in the fourth quarter, good, bad or otherwise that we should think about going into Q1?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thanks Tom. We don't guide to that. But I will say we had a really strong Q4 as you can see, like any Q4, sometimes we're able to pull a couple of things in and we're able to do that, and like every Q1, we'll experience some seasonality. So I would say you probably see patterns similar to what you've seen in the past. No huge surprises there. You've made a quick reference there to the public warning deals. I'd say that those aren't necessarily going to drive those metrics in the immediate future. So as you expect more of the same.

Thomas Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst

Excellent. Okay, thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thank you.

David Meredith -- Chief Executive Officer

Thanks.

Operator

Our next question comes from Sterling Auty with JPMorgan. Your line is now open.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Yeah. Thanks. Hi, guys. I apologize if this is in the press release, but I'm on the road. Just wondering, give some highlights to the large CEM deals, but when you look across the totality of it, what is the average CEM deal size look like and how has that been trending?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Hey, Sterling, it's Patrick. So we don't provide that very precisely. What we've spoken about in the past is that the all-in spend of CEM customers is ranging anywhere from $300,000 to over $1.5 million, and now frankly, we can talk about an even larger number as a result of Q4 over $2 million. So we're excited about that and the continued momentum there.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

All right, great. And then one follow-up, on the IT opportunity, what's kind of the secret sauce or where you feel that you have the biggest opportunity to win? Because that's a space that obviously between PagerDuty and number of other vendors, there's more competitors with a packaged solution than perhaps what you've seen in some of your other like CEM for example. So what's going to be the approach to win business in that space?

David Meredith -- Chief Executive Officer

Yeah. This is David. Thanks, Sterling. This is another area where we feel like we're getting pulled in. And one of the trends that we're seeing over and over again and beating some of the competitors, including the ones you're talking about is vendor consolidation. So when you look at our platform, customers are finding they can replace three or four or five vendors with our platform. So they want us to do more and more and more. So -- and again, if you go back to what we do with CEM and with our risk center with the data, first thing you want to know is all the risk data that's out there. We have over 20,000 verified data elements and it's growing every month because we're always adding more to it. So of course, you want to have all the data coming from all those sensors coming in. It just makes sense.

And this is the strength of our strategy around the single pane of glass, so Visual Command Center. We really own the real estate in terms of the interface that people look at to get all their data. So if there's someone that comes in and says, well, we've got this really nice little IoT module with some data. What our customers are saying to them is, do us a favor, call Everbridge and plug into their modern API architecture, so we can get that data on our single pane of glass called Visual Command Center. So we think we've positioned ourselves very well to kind of superset these different point solution providers that you're talking about. And I think we're getting good traction on that strategy in the marketplace. And then the flip side is, yeah, that's the data -- sure, and the flip side of it is we're seeing more and more use cases around smart buildings, safe cities that play very well to Critical Event Management in terms of how we assess, automate, digitize the response, and then manage the end-to-end process. So that just feels like a good fit in terms of additional use cases leveraging the platform that we have.

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Understood. Thank you so much.

David Meredith -- Chief Executive Officer

Sure. Thank you. Our next question comes from Brad Zelnick with Credit Suisse. Your line is now open.

Bhavin Shah -- Credit Suisse AG -- Analyst

Hi. It's Bhavin on for Brad. Congrats on the strong end to the year. Guys, it's nice to see the momentum in the business, especially with CEM. But if I look at your revenue guidance, it seems like you're guiding below the 30% mark organically, which would be below the commentary that Jaime spoke about earlier for sustainable 30% growth with M&A in addition to that. Are there any one-timer that we should be thinking about or just timing of revenue recognition that are impacting fiscal 2020?

Jaime Ellertson -- Executive Chairman

Thanks, Bhavin. So when you look at the second half of Q4 and what we said to expect from NC4 and you adjust for that, you'll see that we've had strong organic growth. And as I said earlier, as we head into 2020, we've really integrated NC4 and risk center into our entire product offering and so it's difficult to break that out. We've merged our salesforces and as we exited Q4, we were achieving double the rate of sales that that company brought in. So we're excited about the momentum. Looking at 2020 overall, we're providing what we believe with 30% plus growth for the year, what we believe to be realistic and prudent as we sit here today. And time will tell whether we can outperform that.

Bhavin Shah -- Credit Suisse AG -- Analyst

That's helpful. I just want to follow-up on that. I know this year, I think you had a few on-premise deals, which helped out. I don't know if that kind of anniversarying becomes a headwind into 2020?

Jaime Ellertson -- Executive Chairman

No, there wasn't activity like that that was material enough to create a headwind. Our guidance certainly anticipates having to lap any sort of de minimis one-time revenue events and we're excited about the organic growth. We'll continue to look at ways to expand the platform by building, buying, partnering, technology and geographic expansion. So we'll continue more of the same as you've seen historically and that's driving both revenue growth of north of 30%, as well as continued improvement on the bottom line, whether it's adjusted EBITDA or increasingly operating and free cash flow.

Bhavin Shah -- Credit Suisse AG -- Analyst

Very helpful. Congrats on the momentum.

Jaime Ellertson -- Executive Chairman

Thank you.

Operator

I'm showing no further questions in queue at this time. I'd like to turn the call back to David Meredith for closing remarks.

David Meredith -- Chief Executive Officer

I'd like to thank you all for joining the call today. Everbridge had a remarkable fourth quarter, capping our best year ever with strength across the board, and particularly notable momentum with CEM. We believe we are better positioned than ever to extend our competitive lead, further penetrate the opportunity ahead of us and continue delivering strong growth. We look forward to seeing you at upcoming events, including our Investor Meeting, which we're going to have in New York on March 23, and we'll have details coming out about that soon. Thank you again, and goodbye.

Operator

[Operator Closing Remarks]

Duration: 74 minutes

Call participants:

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Jaime Ellertson -- Executive Chairman

David Meredith -- Chief Executive Officer

David Hynes -- Canaccord Genuity -- Analyst

Matthew Stotler -- William Blair & Company LLC -- Analyst

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Ryan MacWilliams -- Stephens Inc. -- Analyst

Scott Berg -- Needham & Company, LLC -- Analyst

Brian Peterson -- Raymond James & Associates, Inc. -- Analyst

William Power -- Robert W. Baird & Co. Inc. -- Analyst

Thomas Roderick -- Stifel, Nicolaus & Company, Inc. -- Analyst

Sterling Auty -- JPMorgan Chase & Co. -- Analyst

Bhavin Shah -- Credit Suisse AG -- Analyst

More EVBG analysis

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