Everbridge (EVBG) Q2 2020 Earnings Call Transcript

Everbridge (EVBG -0.03%)
Q2 2020 Earnings Call
Aug 06, 2020, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Everbridge second-quarter earnings conference call. [Operator instructions] As a reminder, this conference is being recorded today, Thursday, August 6, 2020. It is now my pleasure to introduce the conference over to Joshua Young, investor relations. Please go ahead, sir.

Joshua Young -- Investor Relations

Thank you. Good afternoon, and welcome to Everbridge's second-quarter 2020 earnings conference call. My name is Joshua Young. I am vice president of investor relations for Everbridge.

With me on today's call are Jaime Ellertson, executive chairman; David Meredith, chief executive officer; and Patrick Brickley, senior vice president and CFO. After the market closed today, we issued our earnings release, which can be accessed on the Investor Relations section of our website at ir.everbridge.com. Today's call is being recorded. A replay of the call will be available on our IR website at the conclusion of today's call.

During today's conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include, but are not limited to, those discussed in our Forms 10-Q and 10-K, as well as other subsequent filings with the SEC. Information provided on today's call reflects our outlook as of today, August 6, 2020, and should not be considered representative of our views as of any other subsequent date.

We explicitly disclaim any obligation to update any forward-looking statements prior to our next earnings release. Also, during the course of today's call, we will refer to non-GAAP financial measures. A reconciliation of our GAAP to our non-GAAP financial measures is included in our press release. With that, let me turn the call over to Jaime to begin our prepared remarks.

Jaime?

Jaime Ellertson -- Executive Chairman

Thanks, Joshua, and thanks to all of you joining our earnings call today. We're excited to report financial results that exceeded our guidance. Our Q2 results are, again, a strong example of why we are the critical event management leader and the first choice for organizations desiring to keep people safe and their businesses running in a complex and often challenging environment. As a leader in critical event management, we offer the broadest and deepest platform-enabling organizations to manage and mitigate any type of critical event.

While COVID-19 is a seminal critical event of our time, let's not forget that other critical events can simultaneously affect organizations around the globe almost every day, impacting their ability for people to stay safe and businesses to keep running. This past quarter is a perfect example of how pervasive these critical events can be and how they can affect every walk of life and virtually every organization. From an escalating COVID crisis, touching almost everyone in the U.S., to civil rights protests occurring in almost every major city following the senseless death of George Floyd, and ending up with a hurricane hitting the East Coast, all of which is happening as we speak. Given the number and severity of these critical events, how do organizations identify their impact, ensure their citizens or employees are safe, and successfully mitigate the impact of these events, not just as an isolated incident, but as major critical events that more often are occurring all at once.

Each one of these recent major critical events from pandemics to protests presents a different challenge for organizations. One example of this is the implementation of health checks, social distancing, and contact tracing for schools and businesses and public sector organizations trying to resume operations in the middle of a pandemic. While at the same time, government and corporate organizations are trying to mitigate risks associated with ongoing and new protests and demonstrations to ensure people and property are protected, and they are also looking to provide better communication in order to reduce the possible escalation of these events. To keep people safe and their organizations running, both governments and corporations are turning to Everbridge Critical Event Management suite.

Our suite helps them implement an integrated solution that includes not only a pandemic playbook, but also a protest playbook, a natural disaster playbook, as well as many other best practices to identify risk and understand its impact, automate the implementation of standard operating procedures, and ensure effective communications, all ultimately to mitigate the impact of a critical event. Our critical event management platform was chosen because Everbridge CEM is an integrated suite of applications covering every aspect and type of critical event. While the breadth of our solution is a critical differentiator, so is our proven scale. Our solution has been tested in critical events ranging from the largest terrorist events to wildfires and hurricanes impacting literally hundreds of millions of people.

Our suite is purpose-built with a rich feature set that covers an organization's need to manage all type of critical events from COVID-19 contact tracing through hurricanes and earthquakes, backed by the largest team of domain experts in the world, and with components implemented and tested at scale by over 5,000 customers over the past 10 years. Our leadership is not only recognized by customers, but increasing our position in the market is being recognized by industry analysts as well. During the second quarter, Everbridge won Frost and Sullivan's 2020 Critical Event Management Technology Leadership award and was also honored as the best in category in the Spring 2020 Emergency Mass Notification Software Report. In May, we held our Road to Recovery Executive Summit to help companies and government bodies navigate the complexity of returning to work and school while keeping people safe.

The executive summit attracted over 10,000 participants from all over the world who joined C-level executives from organizations like Accenture, Biogen, the NBA's Boston Celtics, Thermo Fisher Scientific, U.S. Army and others, as well as our keynote speakers, former FDA Commissioner, Scott Gottlieb; and former Secretary of State, General Colin Powell, to discuss steps to safely resume operations. This event reinforced our leadership in the market by allowing us to highlight the industry best practices and our deep domain expertise. Based on the overwhelming success of this event, we're already in the process of planning another executive event to be held in the fall.

So it should come as no surprise that in the second quarter, we continue to see growing interest in our critical event management suite. As in the first quarter, some customers accelerated transactions that might not have happened until late in the year, while other customers and prospects aren't in the position to increase priority of implementing CEM. We continue to see demand from customers and prospects even in the most challenged industries. And our entire team is actively supporting all of our prospects and customers as organizations are increasingly turning to us for solutions that help them return to work safely and be better prepared for whatever crisis they may face next.

In addition to advancing our sales momentum, we also continue to broaden and deepen our technology platform, further distancing ourselves from our competitors. For example, we further expanded our use cases to support customers during the pandemic after launching COVID Shield and followed up that offering with return-to-work use cases and have more recently launched contact tracing capabilities, which employ multitude methods to protect employees. Our contact tracing use case, which is helping customers already leverages control center and safety connection to go beyond just proximity tracing to also cooperate area tracing. During the quarter, we granted another patent for our critical event management technology, which helps protect our lead in the marketplace.

We now have more than 160 granted patents, which underpin proven reliability, built-in-system intelligence, data visualization, multimodal alert capabilities and crisis management techniques of our Critical Event Management platform. In addition to expanding our technology, we also continue to expand our routes to market, including the launch of CEM in Europe and increasing the number of partner relationships to increase our global reach. Finally, during the second quarter, we continued our collaboration with the CDC Foundation to help combat the coronavirus in the U.S., as well as around the world. To date, Everbridge and our employees have already helped raise more than half of our $250,000 target to help support the CDC Foundation's efforts, and we thank those of you who have already joined us in this support.

Now allow me to pass the call over to David Meredith, our CEO, to provide some color and further detail on the terrific results they accomplished this quarter. David?

David Meredith -- Chief Executive Officer

Thank you, Jaime. During the second quarter, we extended our leadership position, provided world-class support to our customers during a challenging time and advanced our mission to keep people safe and organizations running. In fact, we set new company records for revenue, gross profit and net customer retention rate, as well as delivering our largest revenue beat, over $2 million, since our IPO. We also posted one of our best quarters since being a public company for gross margin and adjusted EBITDA margin.

And the strong metrics continued in many other areas of the business, which gives us greater confidence in our increased guidance for the year. During difficult times like this pandemic, companies turn to established leaders like Everbridge. Organizations require -- I'm sorry, organizations recognize that the software solutions they need to protect their people and assets are not quick fixes, solved only by add-on applications. They are looking for a comprehensive solution with the breadth and depth necessary to manage and mitigate any form of critical event from COVID to cyber attacks to hurricanes.

Our performance this quarter reflects our underlying industry leadership. Revenue in the second quarter increased 35% from a year ago to $65.4 million, which was above the high end of our guidance range. We also implemented disciplined expense control to generate adjusted EBITDA of $3.6 million, which was also well ahead of our guidance for the quarter. We have consistently stated that our objective is to deliver top-line growth in the mid-30% range.

In the second quarter, we delivered on that objective. And also saw the benefit to our bottom line performance from shifts in certain investment expenses to later in the year. From a sales perspective, we continue to see increased urgency for adopting or expanding the use of critical event management technology at many prospective and existing customers. While there are some customers and prospects who have had to delay investments during these difficult times, we continue to see customers in even the most challenged industries like retail, travel and hospitality realize both the human and business benefits of implementing critical event management technology at their organizations.

Our increasing business momentum is reflected in our key metrics for the quarter. We added 122 net new enterprise customers in Q2, bringing our total enterprise customer count to 5,340. Over the long term, we continue to target between 110 and 125 net new customer additions each quarter. Our deal activity in Q2 included 100 multiproduct deals at new and existing customers, up from 88 in last year's second quarter as we continue to increase our penetration.

At the same time, our average customers purchased only two of our 10 applications, leaving significant room to grow within our existing customer base. Our average selling price was $67,500 on a trailing 12-month basis, compared to $79,000 a year ago. This decrease in ASP was driven by a large number of smaller deals over shorter sales cycles since the beginning of the year as compared to last year. We welcome these starter deals with customers who can represent significant growth opportunities for us in the future.

And we expect these wins to create even more upsell opportunities as we've seen historically and is reflected in our high net revenue retention rates, which in Q2, reached the highest level in our history. Helping to drive our strong revenue growth was our continued momentum with six-figure deals. We signed 39 six-figure deals in the second quarter, up 30% from 30 six-figure deals one year ago. Our CEM momentum also continues to grow with 12 additional CEM customers in Q2, up from eight new CEM customers in Q2 of 2019.

While we are now approaching 100 CEM customers in total, the vast majority of our more than 5,000 customers remain significantly underpenetrated. For example, we have closed contact tracing deals at multiple customers. Some of whom were already multiproduct customers and some that were driven by contact tracing and are likely to expand to become CEM customers in the future. From a product mix perspective, we continue to see contributions to our growth from both our newer strategic products and our core products, with 56% of new and gross sales over the last four quarters coming from new products.

This consistent and healthy balance of our growth from mass notification and population warning solutions, as well as our newer products supports the long-term growth of our business. Our international business continued to deliver strong growth, representing 22% of our Q2 revenue. Finally, our revenue mix by vertical was consistent with recent history, coming in at 62% from corporate; 26% from local, state and countrywide government; and 12% from healthcare, indicating that our growth remains broad-based. As always, we remind you that quarterly metrics can fluctuate but that the longer-term trends give us confidence that our business momentum continues to grow.

Strong execution for new and gross sales drove our Q2 results. In fact, we exceeded our operational targets for the fourth quarter in a row, in part due to a record quarter for growth sales. This exceptional performance is a direct result of our concerted efforts to further our technology and enhance our go-to-market capabilities. Over the past four quarters, we've made significant changes to our sales organization in the areas of people, organization, processes and technology that will help us continue to drive solid sales growth in the future.

I want to provide you with a deeper look into our sales enablement and training efforts and our application of best practices on a global scale designed to drive our sales velocity. From a people perspective, as you know, Vernon Irvin joined us as Chief Revenue Officer last year. Vernon has been instrumental in leading many of our people, process and technology enhancements. For example, our focus on recruiting diverse leaders with experience selling into the C-suite is driving more enterprise sales as reflected in some of the metrics I just discussed.

In addition, we significantly enhanced our partner relationship team with experienced professionals extending new routes to market across multiple categories like system integrators, telecom companies, the master-agent sub-agent community, product partnerships and OEM relationships. Our enhanced global partner organization is now better equipped than ever to drive more deal flow. These efforts were key contributors to our more than 50% growth in six-figure deals and over 200 multiproduct deals that we've signed since the beginning of the year. Organizationally, we've created the Everbridge Solutions Center of Excellence to support solution-oriented selling and to focus on value-oriented use cases.

To support these efforts as we scale, we've also expanded our sales operations function to enhance sales reporting and performance. From a process perspective, we've implemented a new disciplined qualification and lead management methodology for advancing deals to the sales pipeline across our global organization. We've also introduced new technologies to modernize the marketing and sales automation stack that we use internally. These include the addition of artificial intelligence-based analytics, which enable highly personalized targeting for advertising.

At the same time, we've stepped up our use of social media tools to leverage the power of our community to amplify our online presence. Finally, we enhanced analytics and reporting to provide data-driven insight and a 360-degree feedback loop between marketing and sales. Now to illustrate the specific benefits of our ongoing enterprise sales transition, allow me to provide a little more detail on deal activity during the quarter that drove our positive results and provides us with confidence that our momentum is increasing. During Q2, we saw numerous public and private organizations select CEM, led by electric vehicle and alternative energy company, Tesla, which recognized they needed the ability to see their assets and potential threats, including COVID-19 within a single operating system.

Having initially adopted Everbridge CEM to help keep their manufacturing facility safe, Tesla is now rolling out CEM to cover their approximately 48,000 employees, both during and after the pandemic. In addition, one of the big three U.S. automakers upgraded their Everbridge platform to the full CEM suite, and we saw strong follow-on business with HSBC who is using our platform to keep their employees safe, including managing return-to-work efforts across their offices around the world during the pandemic. Even customers in economically challenged markets continue to recognize the value of CEM.

In fact, some of our largest growth deals in the quarter included customers in the retail, travel and hospitality sectors, such as a multibillion-dollar recreational equipment retailer who came to Everbridge through one of our ecosystem partners to provide a more sophisticated approach to safety and continuity, as well as the leading global shared workspace company who also became a new customer. Our CEM success was not limited to North America. As part of our phased introduction plan, we formally launched CEM in Europe in June with early marquee customers. CEM customers now include an Italian confectioner, Ferrero, the second biggest chocolate producer in the world, best known for long-standing products like Nutella spread and Tic Tac mints.

In the public sector, we continue to see additional adoption, including new wins with the state of Washington, Department of Enterprise Services, the city of Boston and the Department of Transportation in Massachusetts. We continue to benefit from network effects just as we have in Florida and New York, where statewide wins help drive additional deals at cities, agencies and authorities in those states. Similar to network effects in Florida, New York and Massachusetts, we are seeing these network effects at cities, agencies and authorities in the state of California following our statewide win there last year. Joining customers like Los Angeles County in California were Los Angeles Water and Power, San Bernadino County Employees Retirement Association, the cities of Huntington Park and Dana Point, the University of California Davis, the Santa Ana Unified School district and the Greater Los Angeles VA Medical Center.

We also had a number of growth deals in California, including the county of Santa Clara. Additionally, we signed wins at the federal level, such as growth deals with the U.S. Department of Interior and the Department of Treasury, as well as new business with the U.S. Army.

Everbridge now supports more than 60 federal agencies, and the U.S. Nuclear Regulatory Commission marks the latest government agency to grant us an authority to operate, also known as an ATO. With this grant, no competitor in our space has more authorities to operate with the federal government than Everbridge. In addition to success growing our business in the quarter, we remain focused on furthering our technology leadership in the market.

During the quarter, we launched the Everbridge Control Center to bring together physical security information from multiple sources, including IoT devices to enable the integration of data and analytics from even more sources. Control Center leverages our CEM for IoT technology, enabling customers to gather a broad range of situational intelligence while automating targeted responses throughout their entire safety, security and operational ecosystem from across the globe to within local campuses and facilities. As evidenced by our record net retention and our high internal Net Promoter scores, we continue to meet and exceed our customers' expectations. Our close customer relationships continue to drive our product strategy and innovation.

In the early days of the COVID pandemic, we leveraged our agility to address issues that our customers were facing by quickly launching enhanced coronavirus risk data feeds that remain in high demand. We followed up that offering with COVID Shield in order to protect people and supply chains. And during the second quarter, we further extended our return-to-work and contact tracing capabilities. This newest use case, contact tracing, has already seen tremendous early traction in the market.

With the scope of activity already experienced in Q3, more than tripling our performance from the second quarter. The COVID-19 return-to-work solution we announced in the second quarter takes advantage of CEM for IoT by automating temperature checks with thermal cameras, evaluating building and room capacities and monitoring physical distancing. Our system can then automatically launch any necessary operating protocols in response to data collected. Because of the breadth and depth of our solution, we've already seen rapid success across corporate, government and educational institutions.

Numerous colleges and universities across multiple states are already implementing our return-to-campus solutions to improve safety for student, faculty, staff and their families. And of course, once the pandemic has subsided, our customers are equipped with technology to respond to and manage whatever critical event may arise from natural events like extreme weather, to man-made events like active shooters and even cyber attacks, threats that they will be able to identify, manage and mitigate with CEM to keep their people safe and their operations running. Our recent ISO 27701 certification for compliance with global privacy best practices, recognizes our ability to serve customers effectively while rigorously protecting personal identifiable information, or PII, as well as other data. Our way-finding technology takes our ability to help guide people a step further by bringing real-time location and navigation indoors.

Initially targeting the healthcare industry, such as our recent deployments at UCI Health and Houston Methodist Hospital, our way-finding technology can help patients, visitors and staff find their way through interconnected buildings of large medical campuses, thereby creating safer facilities, improving the overall healthcare experience and saving time. Turning to alliances. Our CEM customers increasingly want to partner with us on joint go-to-market initiatives. In the second quarter, we announced a partnership with Siemens, who also plans to be an early adopter of CEM in Europe.

Through this partnership, Everbridge will be able to leverage artificial intelligence and machine learning technology from Siemens. We have also aligned with APCO worldwide, a leading global public affairs consultancy, who is embedding CEM in their global crisis management practice. In addition to people, physical assets, supply chains and operations, reputation brand and public image are important assets for many of our customers, especially in the time of COVID. By partnering with APCO, who, in Q2, became a CEM customer in their own right to protect their employees and operations across 30 locations in more than 20 countries, we are able to extend the reach of CEM with APCO as a channel partner, serving those for whom reputation risk is also a top priority.

On the topic of expanding the reach of CEM to new markets and geographies. In the second quarter, we also completed a small technology tuck-in acquisition of a company in the important Central European dock region that adds command and control capabilities to our suite of products. We are better positioned than ever to support EU member countries as they begin to evaluate public warning systems to meet the EU mandate. As the only provider with a hybrid platform based approach, Everbridge combines best-in-class cell broadcast technology and location-based alerting.

We recently announced two new public warning customers in the Middle East and Africa, meaning that our customer base now spans every major region of the world. These early wins will also represent growth opportunities and references in new regions, enabling us to drive further penetration. With these wins, Everbridge now supports populationwide alerting in 11 countries, across Europe, Asia, Oceania, the Middle East, Africa and South America. And as you know, our population alerting capabilities already power some of the most popular states in North America, including Florida, New York and California, as well as over 3,700 municipalities, counties and cities within 49 of the 50 United States across Canada's provinces and within Europe and Asia.

In order to further expand our go-to-market presence, we introduced a partnership with Taleris. Through our new partnership, Taleris' network of over 4,000 technology brokers will assist businesses in managing critical events such as coronavirus with the full suite of Everbridge capabilities, including our COVID-19 Shield and return-to-work software solutions across the U.S., the U.K., Australia and New Zealand. New relationships like APCO and Taleris add to our growing partner ecosystem that in Q2 helped us win deals with several customers, such as the multibillion-dollar recreational equipment retailer that I mentioned earlier. Partners also helped to secure wins with the top provider of government services, an information technology leader and a large global provider of drug development, clinical diagnostics and pharmaceutical solutions.

And in Europe, another partner landed a win for Everbridge at one of the oldest and most recognized French, high fashion luxury goods manufacturers and retailers. Our progress advancing both new technology initiatives and go-to-market efforts provides momentum for us to continue to capitalize on our growth opportunities in the future. In summary, we're proud to be the leading critical event management solution that companies in the public sector rely upon to keep people safe and organizations running. Customers choose the breadth and depth of the Everbridge platform because they recognize the need to address all types of critical events, not just COVID, with a solution that has been proven at scale with over 5,000 satisfied customers.

And we are pushing our market leadership even further by expanding our offerings while also extending our geographic reach. As a result, we are better positioned than ever to further drive penetration into our multibillion-dollar market opportunity and to deliver strong growth in the years ahead. Now I'll turn the call over to Patrick for more details on our second-quarter financial performance and our guidance for Q3 and full-year 2020. Patrick?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thanks, David. I will review our financial highlights from the second quarter and then provide guidance for the third quarter and the full-year 2020. We extended our track record of strong growth in the second quarter and again exceeded the high end of our guidance ranges. Revenue in the quarter was $65.4 million, up 35% from a year ago.

Adjusted EBITDA for the quarter also exceeded our guidance at positive $3.6 million. Even in the midst of the worldwide pandemic, we saw our net revenue retention rate well above 110% as we continue to provide significant value to our existing customers. In fact, net revenue retention was among the highest we've seen in our history. 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 72.8%, 165-basis-point improvement year over year and a 600-basis-point improvement sequentially, representing the highest gross margin since our IPO almost four years ago as unit economics continue to improve as we scale. As always, keep in mind that quarterly gross margins may fluctuate from period to period and are not necessarily indicative of longer-term trends. For the trailing 12 months, gross margin was 70%, consistent with the year-ago metric.

Total operating expenses in the quarter were $46.1 million, an increase of 27% from a year ago, reflecting continued investments in our platform and our go-to-market strategy, offset by strong expense management, as well as the timing of certain investments that we now plan to make later in the year. Adjusted EBITDA handily beat our guidance at positive $3.6 million, compared to positive $400,000 in the year-ago period. Upside in the quarter was due to our revenue beat combined with management of operating expenses. Net income in the second quarter was $2.3 million or $0.06 per diluted share, compared to a net loss of $1.2 million or $0.04 per share a year ago.

Turning to our balance sheet. We ended the quarter with $491.3 million in cash, cash equivalents, restricted cash and short-term investments, compared to $506.5 million at the end of the first quarter reflecting seasonal cash flow patterns and the impact of the small technology tuck-in acquisition we completed during the quarter. Cash payment for this transaction was $9.2 million net of acquired cash and total cash and stock consideration was $15.3 million. Free cash flow was an outflow of $7.2 million in the second quarter, consistent with seasonal trends, compared to an outflow of $15.2 million a year ago.

Total deferred revenue was $138.8 million at the end of the quarter, an increase of 42% from a year ago. As we note, every quarter, 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 and the timing of annual billings for new and existing customers. For example, several million dollars in billings that occurred in the second quarter of last year will occur in other periods this year, which has a net impact on deferred revenue for the second quarter. As such, the change in deferred revenue in any given quarter is not an accurate indicator of the underlying momentum of our business.

As with all our metrics, we believe the trailing 12-month measures are -- more accurately reflect our underlying performance. The goal of our model remains to drive longer-term revenue growth in the mid-30% range, and our trailing 12-month deferred revenue trends continue to support this objective. Now let me turn to our guidance for the third quarter and the year. After a strong first half, we remain optimistic about our expectations for the full year.

We anticipate -- in the third quarter, we anticipate revenue of between $68.3 million and $68.7 million, representing growth of 30% to 31%. We anticipate adjusted EBITDA to be between a loss of $0.4 million and breakeven. We anticipate a non-GAAP net loss of between $4.1 million and $3.7 million or a loss of between $0.12 and $0.11 per share-based on 34.5 million basic and diluted weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $14.8 million in the third quarter.

For the full year, we are increasing our revenue guidance to the range of $264 million to $266 million, representing growth of 31% to 32%. We are increasing adjusted EBITDA guidance to a range of $6.6 million to $7.2 million. We expect a non-GAAP net loss of between $4.1 million and $3.1 million or between $0.12 and $0.09 per share-based on 34.4 million basic and diluted weighted average shares outstanding. This guidance assumes estimated stock-based compensation expenses of approximately $49 million for the year.

And we continue to anticipate that free cash flow will be approximately breakeven. In summary, we had an exceptional second quarter and first half of 2020 as new and existing customers increasingly turn to Everbridge's leadership. These customers realize that the value that our technology provides them with to keep their people safe and businesses running during critical events that are happening today and those that will inevitably occur in the future. We believe we are better positioned than ever to deliver on our mission and to generate growing shareholder value as we further penetrate a multibillion-dollar opportunity.

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

Questions & Answers:

Operator

Thank you. [Operator instructions] And our first question is from the line of Matt Stotler with William Blair. You may proceed.

Matt Stotler -- William Blair and Company -- Analyst

Hey, guys. Thanks for taking my question. A couple of questions. So first of all, congrats on the results.

You guys have continued to put up strong results in Q1 and Q2, both despite and partially as a result of the environment we're currently living in. I would love to get your observations regarding progression as you move from the March-April time frame into the May-June time frame. And any -- specifically any changes that you saw in terms of deal flow or platform usage, especially the launches of the several COVID-specific solutions that you mentioned?

David Meredith -- Chief Executive Officer

Hey, Matt, this is David. Thanks for the comments and the question. So we continue to see strong demand for our products. Q2, we had a good sales pipeline.

We had sales performance that exceeded our expectation -- our internal expectations. And we're seeing really good demand for some of the COVID-specific use cases that we've launched. We talked about the COVID risk data feed. Our risk data services are in very high demand, far outpacing our expectations in the plan.

The COVID Shield, return to work; and most recently, we've launched contact tracing, and we've seen very rapid adoption of contact tracing. I mean even before we had it officially launched, we had customers signing up, and we've seen that actually accelerate in recent weeks. So we're pretty excited about that. So overall, it is a situation where, I think, customers are looking for help getting back to work, managing their overall risk exposure and business operations in the time of COVID.

And this is the space that we've been in for many years. We have very deep and broad solutions and I think people recognize that and they're coming to us.

Matt Stotler -- William Blair and Company -- Analyst

Got it. Got it. That's helpful. And then one for Patrick.

You mentioned kind of the opex discipline in the quarter. It looks like some of that was on sales and marketing. We'd love to, I guess, just flesh that out a little bit, talk about the adjustments that you made to spending in the quarter and how you're thinking about reengaging with that or what the plans are for Q3 and Q4? Thank you.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Thanks, Matt. Yeah. We are very excited about the growth opportunity, and we continue to invest in it. There were some things in Q2 that we're able to slow down a little bit.

The obvious things are travel and enterprise sales reps not traveling as much in Q2 as they were in prior periods. So yes, there were some obvious things. And then when we consider investing in growth opportunities, some of those more related to category creation, we want to be opportunistic and we anticipate we're going to have opportunities to make those investments later in the year.

Matt Stotler -- William Blair and Company -- Analyst

Got it. Thank you for taking my questions, and congrats again.

Operator

Our next question is from the line of Terry Tillman with Truist. Please go ahead.

Terry Tillman -- Truist Securities -- Analyst

Yeah. Good afternoon, everyone. I'll echo the congratulations. David, thanks for all the details, the color, the wins, everything.

It's very helpful. I'm curious about the starter deal dynamic. Was this just kind of a sign of the times and with COVID and just trying to help people and they want to get started maybe smaller commitment or has this been something that was in the works with Vernon and kind of go-to-market initiatives? And then kind of the second part of that -- so just a little bit more on the background of this. And the second part of it is going forward, then what are the implications on looking at kind of your ASPs as opposed to unit acquisition each quarter? And then I have a follow-up.

David Meredith -- Chief Executive Officer

Yeah. Thanks, Terry. So a couple of things. I think some of this really has to do with the overall dynamics of COVID.

So what's happening is there's a tremendous urgency from our customers and prospects around specific solutions. They're trying to get deployed as quickly as possible to mitigate risk from COVID or something they're trying to do, whether it's getting back to campus for school or back to work or back to public spaces for governments. So they're tending to lock in on a couple of use cases and say, we just -- we got to get this up very quickly. And when they do that, on a positive note, we're seeing the sales cycle, I mean, just dramatically compressed like we've never seen before.

So we can give these deals in quickly, but they're more focused on getting the initial couple of use cases in, and then it becomes a land-and-expand motion as opposed to saying, well, let's take a little more time in the sales cycle and talk about how we can help you do five other things, right? So I think this is really showing up. If you look our growth bookings for the quarter, it's like extremely high compared to what we've seen historically. And I think you see that show up. Our NRR for the quarter is a historic all-time high, it was our best quarter ever in terms of net retention.

So -- and a lot of that's coming from that. We get them in with something quick and then we grow. So I guess it's somewhat serendipitous around COVID, but we do have the packages in place to go do that. And I think a lot of the product offerings we've been launching helped with that.

Terry Tillman -- Truist Securities -- Analyst

OK. Great. And then, Patrick, just a follow-up question. I'm a good listener, understanding deferred and the impact in billings, and we should look at that over a trailing 12-month basis.

One thing I'm curious though, as we get into the second half of the year, you did call out a couple of, I guess, renewals that will hit from 2Q last year hitting in 3Q. So that's helpful. But as we look into the second half or even into next year, but because of the macro and COVID, is there any changes, though, you're seeing across either healthcare, public sector or corporate in terms of how they pay, maybe if there was annual before, it's more periodic payments, anything that you're noticing in terms of how invoicing is changing, if at all? Thanks, and nice job.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Sure. Thank you, Terry. We're continuing to see that we are high up on totem pole when it comes to the organizations that are in distressed verticals or the most distressed verticals, reaching out to their vendors and their partners for payments from request because while we've certainly received some of such requests, it seems like we're receiving far less than a number of my peers are. So I think that bodes well, and it's never a question of whether we can pay.

So there's some of that out there, but I don't anticipate that it's adding anything materially new to our billings dynamic.

Terry Tillman -- Truist Securities -- Analyst

All right. Thanks.

Operator

Our next question is from the line of Scott Berg with Needham & Co. You may begin.

Alex Narum -- Needham and Company -- Analyst

Hello. Thank you. This is Alex on for Scott. And I was wondering, what are your hiring plans for the second half? And are they going to be returning to pre-COVID level?

David Meredith -- Chief Executive Officer

Patrick, do you want to take that?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Yeah. I'm happy to take that. Yeah. You bet, we are hiring.

We are actively hiring. We are looking at bringing in full timers, part timers, interns and reaching out to third parties who can take on additional work that we can toggle up and down. So where -- we manage expenses through periods of immediate uncertainty like what happened with COVID and just kind of the shock. We never slow down investment in, for example, sales capacity.

Hiring, that's critical to revenue generation, we have always prioritized that and that has always remained strong. So it's in the other areas of the business, on G&A, on overhead. Sometimes I have to slow down so that the rest of the org can keep going. And so we have plenty of that, but we're getting back on track across the org very quickly here.

David Meredith -- Chief Executive Officer

Yeah. I think what this quarter showed in one regard is the leverage in the model, where we can turn on more profitability if we need to, but we're still investing in growth. And you saw how we were able to outperform on our quarterly adjusted EBITDA target as we were being cautious on some investments. But over the long term, we're going to continue to invest in growth.

Alex Narum -- Needham and Company -- Analyst

Great. Thank you.

Operator

Our next question is from the line of Brad Zelnick with Credit Suisse. Please begin.

Bhavin Shah -- Credit Suisse -- Analyst

Hi. It's Bhavin on for Brad. Just quickly for one for David and then a follow-up for Patrick. David, great to see more countrywide deployment announcements during the quarter.

How should we think about the pipeline for more of these deals? And then when you talk about the network effects at the state level, should we also see similar types of network effects happen with these countrywide deals?

David Meredith -- Chief Executive Officer

Yeah. That's a great couple of questions. Thank you. I think the first question on the countrywide, some of the work we're doing right now in supporting Norway with how they're leveraging the public warning technology to help manage COVID.

And if you look at Norway's numbers and metrics compared to other countries, even in that region, they've got tremendous metrics in terms of how they're managing the pandemic. But they're using our technology to communicate to all of their citizens and visitors in the country. They're using the technology to help manage social distancing and they're using it even now to help manage communications with citizens of Norway traveling to other regions of the world, if they get exposed to hotspots and communicating with them on the latest protocols in terms of what's happening with quarantine guidelines and things like that. So I think as you see use cases around COVID being used by some of the -- and if you look at who our customers are: New Zealand, Singapore, Norway, Iceland, some of the countries that are doing the best job of managing COVID also happen to be countries that have our platform deployed.

So I think as countries realize that, we're hoping to leverage that to compress time lines on getting deals on. At the same time, there is a lot happening with COVID, in general, which could also be a headwind to this. So we're still figuring out what the balance is on how fast countries will move. But we are encouraged by some of these use cases we're seeing out of Norway.

As far as network effects, absolutely, we're starting to see the same kind of network effects as we've seen at the statewide level with countrywide deals. Singapore is a great example of that, where we've been able to win major telcos, major financial services institutions and now extending that into various verticals and other entities around Singapore. So we do see that network effect as being very important, and that's part of the reason why we're so excited about the countrywide deals.

Bhavin Shah -- Credit Suisse -- Analyst

Thanks, David. That's helpful. And for Patrick, nice to see the strong 2Q performance on revenue, gross margins and EBITDA. Was there anything one-time in nature that kind of benefited revenue or gross margins that we should be thinking about? And then from here, how should we be thinking about the progression of gross margins? Thanks.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Yeah. Thanks, Bhavin. Revenue, there was no material one-time revenue. Whether it's services or sometimes getting a small one-time license across the finish line, we've -- each quarter we've had a little bit, but there was no -- one-time revenue in Q2 of 2019 was much, much greater than it was in Q1 -- Q2 2020.

In terms of adjusted gross margin, you're just seeing in Q2 better visibility into the underlying unit economics that we've been building and experiencing, and that will continue to improve over time. But that said, each quarter could be a little bit different because of the timing of when we're making investments in security and continuing to -- as we continue to go global with our platform and doing localized investments and building out support as we enter new markets. There will be investments that will be a little bit of a headwind on adjusted gross margin at first. And then over time, you'll see us build a lot of scale off of those.

And so we're on track to get to 75%, 77%, 78% in the long run. But between now and then, you'll certainly see it go up and down. Don't be surprised to see adjusted gross margin closer to 71% at times. And when we deliver some of these countrywide alerting deals, they could have some one-time pressure that would only be for that quarter of delivery like you saw in Q1, there was a little bit of that.

Bhavin Shah -- Credit Suisse -- Analyst

Thanks for the color, and congrats again on the strong performance.

Operator

Our next question is from the line of Sterling Auty with JP Morgan. Please go ahead.

Jackson Ader -- J.P. Morgan -- Analyst

Thanks. This is Jackson Ader on for Sterling tonight. Our first question on the corporate side, are you actually seeing any corporate customers may be putting certain products on hold or certain aspects of deal on hold because their employees aren't traveling, just like you said Everbridge enterprise salespeople aren't really hopping around the country these days. Are you seeing that impact deal sizes?

David Meredith -- Chief Executive Officer

Yeah. It's a good question. I don't think it impacts deal sizes. I do -- I think that emphasis placed on certain use cases that are more relevant now than other use cases.

So there are some use cases that in normal times, they would be more focused on. And -- but I would say the net-net of it is, overall, the sales funnel pipeline is stronger overall. And where -- the sales cycles are getting shorter, but we are -- it's a different set of use cases that are of primary interest at this time versus something that would have been nine months ago. So does that answer the question?

Jackson Ader -- J.P. Morgan -- Analyst

Yeah, I think so. Just following up then on these kind of different use cases in 2020 maybe versus previous years, do you expect that the cadence or the mechanics of cross-selling and up-selling those customers to be virtually unchanged going from contact tracing to some of your other products, will that be any different than it was before all this happened?

David Meredith -- Chief Executive Officer

Well, we've been very thoughtful about how we structure some of these offerings. So contact tracing, for example, it's really tied into everything we do and leverages, for example, our safety connect offering. So if you buy contact tracing, you're getting a broader set of capabilities that we're loading in your assets and your people and all the things that we do for a broader implementation and so we feel really confident that these are long-term customers that will be easy to continue to cross-sell, upsell. And it's showing up in the numbers.

Like I said, if you look at Q2, our gross bookings numbers were extremely high. And so -- and it's -- our net retention numbers were all-time high. So I think the formula of land-and-expand is working actually better than usual and we expect that to continue.

Jackson Ader -- J.P. Morgan -- Analyst

Thank you.

Operator

[Operator instructions] Our next question is from the line of Will Power with Baird. You may proceed.

Charlie Erlikh -- Robert W. Baird & Co. -- Analyst

Hey, guys. Thanks for taking my question. This is actually Charlie Erlikh on for Will. I was hoping to ask about the network effects in two different ways.

I guess, first, the state deal is leading to deals within that state. Is there any way to size that? Like when you look at the state agencies and the governments and cities, the municipalities within each of these states, is the revenue opportunity, orders of magnitude, larger than the original full state win? It seems like you're seeing a lot of good traction there. And then second, do you also find that your business exhibits network effects in terms of your existing customers, maybe gaining more value from the Everbridge platform and you add more and more new customers, maybe if they're able to share risk data with each other? Or are there any other examples of network effects in that way? Thanks.

David Meredith -- Chief Executive Officer

Yeah. No, great questions. So the first question, I think the best thing to look at is just a real-life use case, which is Florida. And Patrick, you can jump in.

But just going from memory, I think we have over 400 deals, whether it's an airport, healthcare system, university, statewide agency, city, municipality, corporation. So if you look at what we saw kind of light up that network effect created in Florida, it was over 400 deals in the state and county. And we're already seeing traction in state of New York and state of Connecticut, California, etc. So as far as quantifying that, we'll continue to get more data as we fill in the puzzle pieces in these states.

But directionally, we see very similar to Florida. The second question is a very insightful question. So we have something called Everbridge Private Network, and that's where our customers are able to, on an opt-in basis, to share data and use that to help. So for example, the city of London police, I think they have -- trying to remember the number, I think it's 300 different organizations that are able -- in public and private, that they're able to share data across.

If you look at the New York Transit Authority also similarly has an ecosystem where they're able to share data. And there's other -- there's examples of -- across the healthcare industry, various healthcare organizations sharing data. So we do have these happening. And in our product road map, we're going to be doing some additional enhancements to make it even easier and more value-added for groups of our customers to leverage the Everbridge private network to create more value and just make it more and more sticky to be in with us.

Charlie Erlikh -- Robert W. Baird & Co. -- Analyst

OK. That's really helpful. Thanks, guys, and congrats on the results.

Operator

Our next question is from Ryan MacWilliams with Stephens, Inc. Please go ahead.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Hey, guys. Thanks for taking my question. This one is for Patrick. So it seems like there was a lot of activity in the quarter with bookings being high.

Patrick, were there any deals that were booked but not billed? And could you quantify?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Well, there wasn't a material amount of that activity in Q2, Ryan. You're right, though, to refer kind of big picture when we think about these public warning deals. They aren't our typical SaaS deal, at least not the ones that we've closed to date. We want it to be a SaaS model in future years, but the ones we've closed to date are not.

And so we've got over $10 million of backlog related purely to countrywide deals that are signed that we're working on implementing and that will convert to revenue ideally sometime here in the next two to four quarters. And none of -- or very little of that is in our deferred today, but there wasn't any material have new contribution to that in Q2.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Great. And then a two-parter here, just getting greedy. We have had a lot of focus on the one, too many acquisition, and the public warning opportunity. But David, would you mind touching on your IoT opportunity with Connexient and CNL Software acquisition? And then, Patrick, would you mind just discussing how those acquisitions impacted deferred between the first and second quarter?

David Meredith -- Chief Executive Officer

Yeah. So it's pretty exciting, the technology capabilities we've been able to use to expand our CEM for IoT, and it's helping us with COVID right now. So for example, if you're a customer and you can use our command center now to have thermal cameras when employees are coming into the building and take their temperature, and that's fully integrated with the broader set of capabilities. So if someone has a temperature, you can kick off a protocol about what do you do when that happens.

You can send messages, you can -- we have tied it in with the mobile app, which allows you to do wellness checks. So you kind of go through the full set of use cases around how do I get my people back to the office and make it more safe for them. We have, I think, really unparalleled set of capabilities to help to do that. On the contact tracing side, the technology we got from the Connexient acquisition has been really essential as part of that.

And you're seeing a lot of issues, people trying to do sort of old-fashioned contact tracing. Number one, if you're just having a call center and people calling, people don't want to take the call and they don't want to get that information. It's very inefficient. It's very expensive.

So our ability to bring all of this technology together and data together and kind of triangulate on the problem is very unique, and it's really a digital transformation for what's a very essential but kind of old-fashioned process around contact tracing. And I think that's why we've seen -- we've actually been somewhat astonished at the rapid adoption on closing deals for that even before we had fully launched all the capabilities. And so we'll see where that takes us. But right now, we're very busy signing up customers around the contact tracing and our ability to get that launched so quickly with the direct result of being able to leverage some of the technology from those tuck-ins.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

And with regards to the deferred, you can tell from David's description that we've been fortunate we've been able to take a lot of that technology and make it in combination with our platform, very relevant to the situation that we're in today and that are -- the customers that we support are in with regards to COVID. But these were technology acquisitions where, frankly, we were thinking about future years. We weren't thinking about COVID when we started to pursue these deals because COVID came after that, frankly. So they -- the nature of those businesses is such that, frankly, when you talk about things like thermal cameras or way finding, you need to get on-site to deliver those.

And right now, that just isn't happening. So there isn't much movement in deferred on those businesses, and there may not be for a while. But that's fine from our perspective, that's -- those are projects that we will get delivered, and those are customers that we will be adding to the portfolio and adding to the Everbridge platform over time. And in the meantime, the technology is very relevant as we combine it immediately with our SaaS platform to deliver -- to bring things to market really quickly that are really relevant.

Ryan MacWilliams -- Stephens Inc. -- Analyst

I was just referring to like their acquired deferred in the first quarter, but that makes sense for the detail going forward.

Patrick Brickley -- Senior Vice President and Chief Financial Officer

And that's what my reply was with regards to.

Ryan MacWilliams -- Stephens Inc. -- Analyst

Awesome. Thank you.

Operator

Our next question is from the line of Tom Roderick with Stifel. Please go ahead.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Yeah. Hey, gentlemen. Thank you for taking my question. David, first question for you, I'd really be interested to learn a little bit more about the Siemens deal, both in terms of what you are able to gain from their technology set? And then in terms of how broadly are they using Everbridge? It seems like a really interesting CEM deal that kind of kicks off your presence and footprint over in Europe.

So maybe you could talk about that a little bit. And then more broadly just beyond that, I would love to hear just how you're -- how you've been able to sort of introduce the product in Europe, get some feet on the ground. Where do you stand with regards to go-to-market there on CEM right now in EMEA?

David Meredith -- Chief Executive Officer

Yeah. Tom, thanks for the question. So Siemens is a very important, influential company globally and certainly in Europe. And when we did our big CEM Thought Leadership kickoff event in June, we had Siemens there presenting and their Chief Security Officer, someone who's held in very high regard and is an influencer, thought leader in the space.

And so having Siemens publicly choose to adopt CEM for their enterprise is a really big deal. And the fact that they're out talking about it. I think we've said this before. Goldman Sachs, they don't do press releases for vendors, press release saying Goldman Sachs is doing CEM for the enterprise.

And you can go through every industry vertical and all these top global brands and leading companies wanting to be on record because CEM is really -- it's the standard. And it's the standard at a time when now every board and every CEO, this is a very high priority because of the pandemic. It's raised the awareness level. So we're happy that we're able to continue to get such important companies and individual leaders to go on record.

The Siemens deal is a little more complicated than a regular CEM deal because they're very excited about what we can do, and they've got some intellectual property around artificial intelligence, which they think can further enhance our capabilities and so we're working together on that, and we'll probably talk more about that in the future. But that is part of the overall commitment of what we're doing there, so it's exciting. What was the second question, Tom, sorry?

Tom Roderick -- Stifel Financial Corp. -- Analyst

Yeah. Just more broadly on CEM go-to-market in Europe, how you're doing building out sales heads, building out regional expansion? I just want to get an update on how that's coming on.

David Meredith -- Chief Executive Officer

We've built up our go-to-market capability nicely. We've got, for the first time in this past year, we've added a partner team in Europe, and we're already -- I think I mentioned in my prepared remarks, already bringing in deals from that. We've got -- we've added additional experienced sales -- enterprise sales leaders across Europe. And we've got a very nice sales funnel coming out of the quarter, which was -- both factored and unfactored looks good.

And we've got a nice prospect list and engage in a lot of discussions. So again, you never know with COVID, sometimes it helps and sometimes it slows things down. But I think right now, we're optimistic about the conversations we're having and the team there is really excited to finally be able to sell CEM in Europe. So the sales team there is very happy.

Tom Roderick -- Stifel Financial Corp. -- Analyst

Great. Patrick, quick follow-up. You just mentioned something really interesting regarding the over $10 million in backlog for some of these countrywide deals as you look to push those into a SaaS framework and something that you can take on an ongoing subscription basis. Can you give us just some sense as to what else functionally or organizationally needs to be done to be able to turn those deals into SaaS deals? I know there's some technological components that sit next to the carrier.

Can you give us an update as to what you have one too many brings to the table? And how far away you think that might be?

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Yeah. Thanks, Tom. So that backlog that I referred to, those are deals that are signed, and those deals provide perpetual licenses. So that makes -- that really limits the ability to recognize revenue over time.

And then the delivery of the technology is also a component of -- that drives accounting and to the extent that you are installing something on the premises of a customer and it's a perpetual license, you really end up having to recognize most of the revenue upon delivery. And so that's what a lot of that backlog is, not all of it. There's support maintenance, there are hosting-related services. In fact, for one of those deals, part of the hosting is performed on a cloud basis we're actually providing.

And this gets to the answer of your question, Tom, we are able to provide public warning as a SaaS cloud-based solution. It comes back to what do the buyers want to the extent that sometimes there's a telco, sometimes it's a government, and they just want it on their site and they're used to perpetual licenses. Sometimes we see that. And we've certainly seen that on the deals that are in backlog now.

But we've already started the discussions where governments or third parties acting on behalf of governments are putting out feelers, requesting information, we're replying with, good news, we can do this with the modern infrastructure and deployment through the cloud. And we'll always be updating it, etc., etc. And we're getting some positive feedback on that. So we hope that we'll be able to sell a number of future deals on a ratable basis.

Tom Roderick -- Stifel Financial Corp. -- Analyst

That's great. Thanks so much for the detail. Appreciate it.

Operator

Our next question is from the line of Mike Walkley with Canaccord Genuity. Please proceed.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks for taking my questions, and my congrats also. Question I want to ask just with the CEM market now probably a much larger opportunity than most imagine with COVID-19, there's some large technology companies getting into contact tracing. As Everbridge, are you seeing any change with new entrants may be coming into this market with the TAM being so much larger than it might have been a few months ago? And then are you seeing any maybe changes for more aggressive tactics from some of your previous competitors? Thank you.

David Meredith -- Chief Executive Officer

Yeah, Mike. Thanks for the question. So you raised a really good point, which is we've been saying all along that this critical event management is an important category. It's a big, global growing category.

And we've been -- this is where we've been. This is where we live. This is what we've been building out now for years. So it is interesting to see companies now sort of -- because I think one of the things companies are finding is that they're showing up, trying to sell their solutions and all the customers want to talk about is COVID.

So everyone is putting a COVID spin on whatever it is they try to sell. And the idea that someone is going to throw together like a mobile app in a couple of months and -- we spent years, we have over 160 patents. I mean this is -- the breadth and depth of our capabilities just far exceeds what anyone else out there has. So I agree with you, we are seeing more companies come in and sort of take the language literally right off our website and talk about it.

And in a way, I think, first of all, it validates that this is a big space, it's a growing space and there'll be other people getting into the space. For our historical competitors, kind of the point solution providers, I think in a time of crisis, with the pandemic, I'd say good gets better and bad gets worse. And you want to be with the top provider and you're never going to get fired picking Everbridge. I mean we've had -- I think now we're getting close to 700 million communications that we've sent out just from COVID alone.

I think we've done 45 million communications related to civil unrest. There's no one in the industry that can handle the scale that we do. and so I think there's a flight to quality with customers, frankly. And we even had some customers come to us when they still have time left on their contracts with some of the other point solution providers and saying, hey, we just got to get on something that scales better.

So it is changing and evolving. I think the opportunity set is much bigger. We track this. And historically, the total economic losses from critical events are about $500 billion a year.

And the latest research on COVID now, they're talking about $6 trillion a year. So now it's a $500 billion a year problem, that's become a $6.5 trillion a year problem. So it is a bigger problem. It's a bigger opportunity.

And we'll -- we're monitoring all the players out there closely and we think that we're responding well in terms of how we're going to market.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks. And just a quick follow-up question on that, David. Just with your land-and-expand strategy, it just seems like interaction with customers have to be at all-time high, just as you try to help them get their people back to work safely.

But it seems like as you get closer to your customers, get closer to protecting the revenues such as helping with supply chain and other things that you become even more of value, maybe you can upsell more to your customers. Can you share with us maybe how conversations might be changing with customers? And if it's leading to even new use cases that you might have thought about pre-pandemic?

David Meredith -- Chief Executive Officer

Yeah. It's absolutely true. What's happened now is we have -- we're up to over 200 out-of-the-box integrations across all of our capabilities. So we're really an enterprisewide platform and we're always on, always watching, helping with their operations.

So more and more, we're coming up with these, what we call, operational use cases, which drive really strong return on investment. So not only is it good where they can say, hey, we're fulfilling our duty of care. We're protecting our people, keeping the organization running. But also, we're getting really good return on investment because we got less IT downtime.

We're having really good traction with our IT learning offering. And that's -- and the business case, we just had a major industry analyst did a report and came out and said, There's a very significant return on investment from having CEM deployed, and they talk to several of our customers to do that research. So more and more, we're seeing that. I think a lot of our new use cases are being led by our customers.

So we talked about the thermal cameras. We had customers coming us saying, hey, we've got to deploy thermal cameras. We want to be able to have this plugging in. So it was important that we had that integrated into the broader set of CEM capabilities.

So contact tracing is one where the university is saying, hey, we've got to have contact tracing as part of our broader set of capabilities for return to campus. And a lot of urgency on that. So those are just a couple of examples. But you're absolutely right.

We're very engaged with our customers. We're talking to them more than ever before, and we're leveraging that. I talked about in my prepared remarks that virtuous feedback loop of talking to the customers, seeing where the pain points are and then very quickly getting out new offerings. The whole COVID-19 risk data feed that we added to our risk center was a result of that.

And that's been in very high demand. So far, our product management process is working in terms of working with those customers. Thank you.

Mike Walkley -- Canaccord Genuity -- Analyst

Great. Thanks for taking my questions.

Operator

Our next question is from the line of Brian Peterson with Raymond James. You may go ahead.

Brian Peterson -- Raymond James -- Analyst

Thanks, gentlemen. Hope you're doing well. Appreciate you taking the question. I'll keep it to one.

I know we're running long here. But just, David, I know you've mentioned the partner channel multiple times since you've come onboard. Again, it was mentioned this quarter. I'm curious how that ramp is going versus your expectations.

And if we had to think maybe three to five years out, how would you think about the partner channel in terms of maybe contribution to bookings or revenue or however you're going to size it? Thank you.

David Meredith -- Chief Executive Officer

Yeah. Thank you. We do talk about it a lot because it is a -- it's a change. Historically, we've been primarily focused on the direct sales channel.

And I think it's exciting that given the historical growth of the company, driven primarily through direct, the opportunity and the upside from adding additional indirect channels, additional routes to market, while continuing to improve our enterprise sales transition. So that's the opportunity. My expectation, it is a new thing for us. So I feel like this year is foundational.

If you want to do the flywheel, it's -- we're pushing the flywheel and it's starting to move, and it's starting to turn around. But you say three to five years, I think in three years, the flywheel should be spinning full speed so we're nowhere near what I think we can get to based on my experience in past companies and past jobs. But we're getting -- every quarter, we're getting proof points. We're getting -- we talked last quarter about Cisco.

Fantastic new logo, full CEM deal, global, across offices and almost 100,000 people. I mean that's a tremendous win from a partner. And this quarter, we talked about some of the wins, I don't think we can name them, but we describe them, big companies. So we continue to get proof points.

We continue to incrementally add. But full rollout and full capabilities, which I think three years is probably a reasonable time frame. I'd like to do anywhere from 15% to 30% of our bookings coming from indirect.

Brian Peterson -- Raymond James -- Analyst

Great. Thanks, David.

Operator

Mr. Meredith, there are no further questions at this time. You may continue with your presentation or closing remarks.

David Meredith -- Chief Executive Officer

Thank you. Yes. I'd just like to thank everyone for joining the call today. We're clearly benefiting from our leadership position and strategic vision in the critical event management market as customers and prospects in the corporate, healthcare and public sectors increasingly turn to us for solutions.

We will be attending the Canaccord and Oppenheimer conferences next week, and we welcome the opportunity to meet investors at these events. Thank you again. Goodbye, everyone.

Operator

[Operator signoff]

Duration: 78 minutes

Call participants:

Joshua Young -- Investor Relations

Jaime Ellertson -- Executive Chairman

David Meredith -- Chief Executive Officer

Patrick Brickley -- Senior Vice President and Chief Financial Officer

Matt Stotler -- William Blair and Company -- Analyst

Terry Tillman -- Truist Securities -- Analyst

Alex Narum -- Needham and Company -- Analyst

Bhavin Shah -- Credit Suisse -- Analyst

Jackson Ader -- J.P. Morgan -- Analyst

Charlie Erlikh -- Robert W. Baird & Co. -- Analyst

Ryan MacWilliams -- Stephens Inc. -- Analyst

Tom Roderick -- Stifel Financial Corp. -- Analyst

Mike Walkley -- Canaccord Genuity -- Analyst

Brian Peterson -- Raymond James -- Analyst

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