Everbridge (EVBG) Q3 2021 Earnings Call Transcript

Everbridge (EVBG)
Q3 2021 Earnings Call
Nov 09, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello, and welcome to the Everbridge third quarter 2021 earnings conference call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Patrick Brickley, chief financial officer. Please go ahead.

Patrick Brickley -- Chief Financial Officer

Good afternoon, and welcome to Everbridge's earnings conference call for the third quarter of 2021. This is Patrick Brickley, executive vice president and chief financial officer of Everbridge. With me on today's call is our CEO, David Meredith. After the market closed, we issued our earnings release, which can be accessed on the investor relations section of our website at ir.everbridge.com.

This call is being recorded and a replay of the teleconference will be available on our IR website at the conclusion of today's event. During today's call, we will make forward-looking statements regarding future events or the financial performance of the company that involve certain 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 this call reflects our perspective only as of today and should not be considered representative of our views as of any subsequent date. We explicitly disclaim any obligation to update any forward-looking statements or our outlook. Also during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of our GAAP to non-GAAP financial measures is included in our press release.

With that, let me turn the call over to David for his prepared remarks. David?

David Meredith -- Chief Executive Officer

Thank you, Patrick, and thanks to all of you for joining us today. We delivered strong third quarter results that again exceeded our guidance for revenue and profitability. Revenue of $96.7 million increased 36% from a year ago. And both adjusted EBITDA and non-GAAP net income were positive for the sixth quarter in a row.

Our strategic CEM and public warning platforms continue to be chosen by large enterprises across the globe to keep people safe and their organizations running as evidenced by our record number of deals valued at more than $0.5 million that we closed in the quarter and a record international mix driven by CEM deals, Public Warning wins and existing customer expansions. These strategic wins and expansions fueled our trailing 12-month ASP that exceeded $100,000 for the second quarter in a row, increasing by 41% from a year ago. As greater numbers of the global population become vaccinated against COVID-19, organizations, schools and governments continue to move toward plans for more normalized protocols. However, to avoid outbreaks that could impact people and operations, as well as meet guidelines and requirements promulgated by various governmental and health organizations globally.

They will need solutions to manage the continuing risks related to COVID-19. Additionally, most enterprises continue to feel the effect of both natural and man-made critical events such as the forest fires that have impacted the Western US and Australia, as well as an increasing number of digital threats such as ransomware and other forms of cyber attacks and IT outages that can impact their people and processes. Furthermore, the global supply chain faces massive disruption, which can be mitigated in part by critical event management. As a result, our CEM suite continues to be increasingly relevant.

And in the third quarter, we saw key CEM wins both in North America and internationally across all of the markets we target corporate, government and healthcare. We also recently extended our CEM certification program internationally, to further establish ourselves as the clear leader in setting the standards for best practices against which organizations will be evaluated globally. Before I get into the highlights of the quarter, I want to acknowledge an important national development here in the United States. The recent passage by Congress of the historic $1.2 trillion infrastructure package, presents a potential catalyst to unlocking funding opportunities and accelerating projects with federal state and local governments for our CEM for Public Safety solutions.

Our capabilities can provide increased resiliency across a variety of strategically important categories such as the modernization of the nation's emergency 911, and national warning systems. We continue to demonstrate our expertise and leadership in these areas with recent launches of new products and feature enhancements such as Everbridge 911 Connect and our recently announced integration with RapidSOS for providing more contextual data to dispatchers at the time of a 911 call. And our E911 capabilities to help direct emergency responders to the exact location of someone seeking assistance through multiline telephone systems. As we announced yesterday Cisco's Webex Calling and UCM cloud platforms can now leverage this E911 capability as well.

Additionally, Everbridge public alerting systems can help support continuous secure collaboration for warnings across federal state local and tribal governments during emergencies. When coupled with our recently launched next-generation version of our Resident Connection product, this enables local governments to reach a higher proportion of their residents in a critical event. Given our FedRAMP compliance status and growing footprint at all levels of government, Everbridge remains well positioned to benefit from increasing investments in infrastructure. Focusing now on our Q3 results, we saw continued strength in our Critical Event Management business with key new and growth CEM deals around the globe.

New customers in the quarter included North American game developer Ubisoft, and medical technology leader Stryker both of whom chose broad CEM suites. And leading international organizations such as one of the world's largest IT services companies based in India, who is also implementing our CEM suite. This important new win creates further expansion opportunities within this large international IT leader as well as positions us to expand our CEM presence in India where we have already had tremendous success with the widespread adoption of our public warning solutions. In parallel, we continue to see existing public warning and mass notification customers among our over 6,000 customers upgrade onto our CEM platform.

In Q3, the CEM expansions included Global Banking Giant Citizens Financial, as well as one of the largest global professional services firms, who has the potential to further expand in the future. Healthcare leader Hackensack Meridian Health, a top ranked hospital system in New Jersey who is already an IT alerting and wayfinding customer expanded to become a CEM customer in the quarter. Finally in the government market the United States Department of Commerce chose our CEM platform to address gaps with Bureau, Communication and Situational Awareness. Our successful combination of xMatters into our larger suite of CEM for digital offerings extends our capability to support both digital and physical risks across a single pane of glass.

This very powerful proposition differentiates us in the market. It also strengthens our broader land and expand sales motion which leverages our full product portfolio to accelerate customer adoption and fell deeper into the enterprise. Social media giant Twitter is a great example of executing on this land and expand strategy. Twitter initially purchased mass notification five years ago.

They had added Safety Connection two years ago. And in Q3 they expanded to CEM and will incorporate numerous data feeds to their fusion center integrating digital and physical security. Pharma leader, Takeda demonstrates an additional example of Fusion Centers driving our land and expand strategy with their commitment to further build out their global security operations center with CEM. Of course, winning new customers that have the potential to expand over time is an important element of this strategy as well.

Some of these new customers in the quarter included pharma leaders Merck and Teva, global accounting leader BDO; and automotive retailer, Discount Tire. On top of our US Department of Commerce CEM win which was just one highlight from a very busy third quarter for government business. We signed several growth transactions with federal departments and agencies in the US and also closed a number of international deals. Among our federal wins in the quarter the Mosquige Creek Nation Health System which supports the fourth largest native American tribe in the United States initially purchased Everbridge in February for vaccine distribution.

In Q3, they expanded the contract to improve communications with their patients as well. We are also happy to welcome the Centers for Medicare and Medicaid Services as a new federal customer. CMS will leverage Everbridge to notify employees of cybersecurity training and warnings COVID-19 updates safety and compliance protocols, important human resources information and to measure employee engagement. The US Department of Agriculture's Office of Homeland Security leads security preparedness and response efforts to ensure USDA employees and stakeholders are prepared to support the agency's mission.

They selected Everbridge to enhance their risk intelligence monitoring of key locations both domestic and international to keep ahead of any potential threats to the USDA. The Food and Drug Administration or FDA will be leveraging Everbridge Risk Center to monitor their physical locations across the globe to help ensure they have no gaps in situational awareness. Additionally, the office of Protective intelligence of the US Marshals Service is following in the footsteps of the US courts in their protective services efforts. With Everbridge the Marshals Service can gather hyper-relevant data and insights to detect and protect from new and evolving threats.

The US attorneys middle district in Florida serves 35 counties across the state which is over half the population of Florida making the Middle District the second most populous US attorney district in the nation. Last quarter they expanded their use of Everbridge Risk Center and added more locations to monitor collect and analyze threat data to better respond to potential risks in their offices and employees. In addition to our CEM and related progress, we recorded a number of important public warning wins to expand our global leadership position in this category. During the quarter, we received notification that we won another of the top five most populous countries in the European Union or EU, Spain with a population of $47 million.

Spain shows our cell broadcast solution in a competitive bid process. As the leading provider of hybrid public warning solutions with cell broadcast, location-based SMS and other 5G compliant modalities across both government front-ends and carrier back-ends we are increasingly seeing opportunities to leverage our land and expand strategy in public warning, as we've done successfully with CEM. For example, in the third quarter, we inked a significant expansion in the Netherlands, one of our countrywide public -- with our countrywide public warning system. At the same time, network effects where municipalities within the country also adopt Everbridge, can multiply the number of opportunities as we've seen in Norway, Sweden Singapore and other countries.

Our recent highly visible go live in Australia, further highlights our ability to support large-scale, complex, countrywide deployments that are having real impact for serious threats that countries are facing right now, and further emphasizes that Everbridge represents the most reliable choice for countries still looking for a public warning solution partner. Allow me to pivot from our strong top-line results to our overall execution, balancing both growth and profitability that delivered positive adjusted EBITDA that was also above our guidance range. Although the COVID-19 pandemic and an intensely competitive hiring environment continue to create uncertainty in the overall market, our ability to generate positive non-GAAP profitability for six quarters in a row gives us confidence in the long-term efficiencies that we'll increasingly be able to leverage, as we continue to grow the business. Turning to our metrics for the third quarter, our performance again illustrates the success of our CEM strategy with large new customer wins, multi-product expansions and triple-digit ASPs.

We added 120 net new enterprise customers in the third quarter, raising our total enterprise customer count to 6,010. 15 customers either selected or expanded to our CEM platform, bringing the total number of CEM customers to 173, a 57% increase in the number of CEM customers from one year ago. As in the second quarter, our momentum with large transactions continued in Q3 with quarterly ASPs that moderated slightly from our record second quarter, and resulted in trailing 12-month ASPs that were again above $100,000 an increase of more than 40% from a year ago. Contributing to this ASP growth were 45 deals worth more than $100,000 per year.

And another record for the number of deals valued at more than $500,000 per year. From a product mix perspective, 63% of new and gross sales over the last four quarters came from new products, as we continue to see demand for our newer applications. Our international business also continued to post strong growth results in Q3 with a record 32% of total revenue coming from outside the U.S., compared to 27% one year ago, as we expand our presence in every major region of the world. Our revenue mix by vertical was relatively consistent with past quarters at 67% from corporate; 24% from local, state, and countrywide government; and 9% from healthcare reflecting strong growth in the corporate market with increasingly post-vaccine use cases.

As always we remind you that quarterly metrics can fluctuate but that the longer-term trends continue to reflect our overall business growth. These outstanding metrics demonstrate the growing market acceptance of our overall CEM strategy as well as our ability to close larger transactions from our pipeline as organizations increasingly embrace CEM to address numerous high ROI or return on investment use cases. Other operational highlights from Q3 include our progress with our partner channel which continues to be a valuable driver of business activity. Just a few weeks ago Deloitte's Cybersecurity Center for the EMEA regions became our latest partner.

Everbridge CEM solutions will now be offered as part of Deloitte's EMEA Cyber Sphere Centers cloud-based detect and response services for government and commercial customers to enhance the protection and continuity of digital and physical operations. During our last call, we introduced the CEM certification program with Discover, Goldman Sachs, NBCUniversal, Dow, and Alexion among the first Fortune 500 leaders earning the Prestigious Best in Enterprise Resilience designation. Since our last call, financial services leaders Finastra and Comerica Bank; pharmaceutical leader Takeda; and international advertising firm Dentsu have joined those organizations ranked as best in enterprise resilience with some leveraging this certification to distinguish and promote their own brands. We recently extended our international CEM certification momentum with global industry leader Siemens representing another of the latest organizations outside North America to earn this prestigious designation.

Turning to continued innovation. Last quarter, I mentioned that organizations are finding that our travel risk management solutions including Safety Connection are perfectly suited for work from home work from wherever you are in hybrid work location policies. As employees begin returning to business travel, we see this interest accelerating. With ISO's recent publication of Standard 3130 enterprises are looking to adopt its guidelines on how to manage risks for organizations and their travelers including threat detection, risk assessment, and prevention and mitigation strategies.

Everbridge remains very well-positioned from increased interest and attention to travel-related risk. In fact just as organizations are improving their formulation of playbooks for managing traveler and remote work risk we are accelerating the execution of our strategic product roadmap to bring additional travel risk management capabilities in-house, building on our 20 years of critical event management and risk intelligence leadership. In order to accelerate our success, we completed a tuck-in acquisition of partner Anvil Group a few days ago. The combination of Anvil's Risk Matic platform with CEM will provide medical, security, and travel assistance and advice to those in need and help keep people safe wherever they go.

This strategic acquisition further extends our position as the leader in critical event management and risk intelligence which is especially timely with today's evolving travel and remote work location trends. In summary, we continued our momentum in the third quarter with results that were above our guidance ranges. As our business scales, we keep driving incremental margin improvements and we're excited that we have continued to generate strong topline growth, while also increasing profitability. We look forward to closing out a record year, as we leverage our leadership position in the market to keep penetrating the multi-billion dollar opportunity we are pursuing.

Now, I'll turn the call over to Patrick for more details on our third quarter financial performance and our guidance for Q4 and full year 2021. Patrick?

Patrick Brickley -- Chief Financial Officer

Thanks David. We had a great third quarter with record revenue of $96.7 million, an increase of 36% from a year ago and above the high end of our guidance range. Our net retention rate continues to track above 110%, reflecting continued customer satisfaction, combined with demand for additional Everbridge technology at existing 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 73.3% relatively consistent from a year ago with the impact of growth investments offset by efficient fees from greater scale. Total operating expenses in the quarter were $68.7 million, an increase of 38% from a year ago reflecting continued investments in our platform and our go-to-market strategy. Adjusted EBITDA was $4.9 million well above the high end of our guidance range, due primarily to the revenue upside in the quarter and to a degree from a more challenging hiring environment as well.

Net income in the third quarter was $2.1 million, or $0.05 per diluted share, compared to net income of $2.8 million, or $0.08 per share a year ago. On a GAAP basis, our net loss was $28.7 million. Turning to our balance sheet. We ended the quarter with $555 million in cash, cash equivalents restricted cash and short-term investments, compared to $568.3 million at the end of the second quarter, reflecting seasonal cash flow patterns during the quarter.

Note that our cash balances do not reflect our strategic acquisition of Anvil Group for approximately $161 million, which will be reflected in our fourth quarter results. Operating cash flow was an outflow of $2.7 million and free cash flow was an outflow of $7.5 million. Total deferred revenue was $214.1 million at the end of the quarter, an increase of 44% 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.

As such, the change in deferred revenue in any given quarter is not an accurate indicator of the underlying momentum in our business. We believe our trailing 12-month performance is much more indicative of our overall business trends. Now, I'll turn to our guidance for the fourth quarter and full year, which includes the impact of our third quarter outperformance and our continued business momentum. Note that the anticipated impact from our Anvil acquisition on fourth quarter and full year revenue is not material.

For the fourth quarter, we anticipate revenue of between $102 million and $102.2 million representing growth of 35%. We anticipate adjusted EBITDA to be between negative $1.8 million and $1.4 million. We anticipate a non-GAAP net loss of between $7.8 million and $7.4 million, or a loss of between $0.20 and $0.19 per share based on 38.8 million basic and diluted weighted average shares outstanding. Stock-based compensation expense is expected to be approximately $20.9 million in the fourth quarter.

For the full year, we are increasing our revenue guidance to a range of $367.6 million to $367.8 million, representing growth of 36%. We anticipate adjusted EBITDA will be in the range of $8.8 million to $9.2 million. We expect a non-GAAP net income of between $3.7 million and $4.1 million or between $0.09 and $0.10 per share based on 39.5 million diluted weighted average shares outstanding. This guidance assumes estimated stock-based compensation expenses of approximately $66.5 million for the year.

And we continue to anticipate that free cash flow will be approximately breakeven and perhaps slightly positive for the year. In summary, we delivered a strong third quarter and are well positioned to close out 2021 with excellent financial results. Now operator, we'd like to turn the call open for questions.

Questions & Answers:

Operator

[Operator instructions] The first question comes from Scott Berg with Needham. Please go ahead.

Scott Berg -- Needham and Company -- Analyst

Hi, David and Patrick. Congrats on the good quarter. David, I just wanted to start kind of high level. I think some of the global supply chain issues are in the news every other day or every other minute at least it seems.

Is that a scenario that you guys -- what your broader CEM package have had some success selling into or at least having some conversations on how you can help maybe mitigate some of those challenges out there today?

David Meredith -- Chief Executive Officer

Yeah, Scott. Thanks for your comments and the question. Supply chain is definitely one of the modules of CEM that we launched a few years ago and we have some major global brands that are using the CEM platform. When you think about CEM it's the ability to keep track of everything you care about and that's your people, your operations, your offices, your supply chain also your supply routes and then being able to -- and your brand and reputation and then being able to overlay that to know what are any possible threats that are coming that could disrupt that.

So it's a perfect scenario for CEM and it's definitely something that our customers are dealing with and we're trying to help them with.

Scott Berg -- Needham and Company -- Analyst

Got it. Helpful. And then Patrick, I wanted to see if you can give us a little detail on the Anvil Group acquisition $161 million is certainly a sizable amount, maybe some financial color on it in terms of trailing 12-month revenues expectations for impact in Q4 maybe how it's grown, etc.?

Patrick Brickley -- Chief Financial Officer

Yeah, sure, Scott. So the impact on Q4 is not material due to timing and deferred revenue haircut etc. I think the color that I can provide at this point is that we anticipate approximately $5 million of acquired deferred revenue before impact of purchase accounting and the haircut on that. So we'll have more -- we just closed this a couple of days ago, so we'll have more to discuss on the next call.

But for now, in Q4, it's -- the impact is not material.

Scott Berg -- Needham and Company -- Analyst

Helpful. Thanks for taking my questions, everyone.

Patrick Brickley -- Chief Financial Officer

Thank you.

David Meredith -- Chief Executive Officer

You bet. Thanks, Scott.

Operator

The next question comes from Sterling Auty with J.P. Morgan. Please go ahead.

Sterling Auty -- J.P. Morgan -- Analyst

Yeah. Thanks. Hi, guys. Wanted to dive into the EU opportunity, you've had significant traction there.

Can you give us a sense of where you are in the penetration of that opportunity? And when – or how should we think about the revenue ramp associated with the deals that you've already closed?

David Meredith -- Chief Executive Officer

Sterling, hi, thanks for the question. Yeah, we are getting closer to the EU mandate deadline at end of Q2 2022 and as we've always said and expected that, more of the activity would be back-end loaded. We are – we did have to do a full competitive bid process for the Netherlands, but we came out of that with a much bigger deal than we had previously and expanding what we had with them. And obviously, Spain was a strategically important win.

We still see additional activity on RFIs and RFEs. As far as the revenue, the timing on these can vary in terms of how soon they get implemented and that sort of thing the best of our knowledge that the numbers are kind of baked into our guidance that we're giving. Patrick feel free, if you want to jump in, and talk about the metrics a little more as well.

Patrick Brickley -- Chief Financial Officer

Yeah. I mean, I think you basically covered it, David. They – we get these initial deals out of the gate, they rarely encompass the full opportunity with these countries. Sometimes they'll do a front end, or part of the back end, but not the whole thing.

So we're excited that we continue to land deals. We're excited about the long game and the network effects we've seen these deals are important to establish sort of an umbrella that we use to go ahead, and roll-up a lot of business within the geography. So it's so far so good in terms of knocking these down, and hopefully more to come.

Sterling Auty -- J.P. Morgan -- Analyst

And then one follow-up, how would you kind of characterize from a high level of the business momentum? And let me give you a little context. I think investors are looking at the results that you had a couple of quarters ago, where it was just evident that it was just extremely strong. And sometimes, I think, it's hard for us to understand, how the different opportunities are being layered in, how the acquisitions like xMatters are kind of contributing. So would you just from a high level say that, the momentum in the business is as good, stronger, or maybe took a little bit of a step back here in the quarter relative to what you saw over the last couple of quarters?

David Meredith -- Chief Executive Officer

Well, I think that we're seeing some consistent trends, which are one we're selling up higher into the organization. There's an increased awareness of the importance of CEM. And we're doing a better job of bundling together, our different CEM capabilities into deals and that's manifesting itself in the ASPs, and the large deals. So this quarter, we did an all-time record for more 500,000-plus deals than we've ever done in the company's history.

And that helped to support a second consecutive quarter of six-figure ASPs. So I think that's a good view into kind of the fact that customers are seeing this as being more important. And that's a trend that, I think I mentioned, multiple earnings calls ago and it's continued to develop. So I think from that perspective, it speaks to the importance of CEM, and the momentum that we have with the business.

I don't know, Patrick, do you want to jump in.

Patrick Brickley -- Chief Financial Officer

Yeah. You saw a continued improvement in our globalization and with over 30% of our revenue coming from customers outside of the US, a couple of years ago that was single digits. So we're continuing to make progress in a lot of different areas. I think we said last quarter when the CEM addition count was around 19%, I believe it was that we thought that that was a great result, but also some of the timing of these deals will not always be linear.

And we didn't think that every quarter, thereafter, was going to set a new record. So as David mentioned, we've got a lot of continued success with CEM and we anticipate more to come.

Sterling Auty -- J.P. Morgan -- Analyst

Sounds good. Thank you guys.

David Meredith -- Chief Executive Officer

Thank you Sterling.

Operator

The next question comes from Matt Stotler with William Blair. Please go ahead.

Matt Stotler -- William Blair -- Analyst

Hi guys. Thanks for taking the questions. Maybe just to start off with if I look back a year ago, Q2, Q3, Q4, you're seeing a lot of obviously deals tied to some of the COVID-specific data feeds and the products that you're providing like COVID Shield. You mentioned in the prepared remarks that you're seeing a lot of contribution swinging back to non-COVID use cases if you will.

But just as we annualize the deals where you did have those customers that were adopting maybe smaller COVID-specific solutions for those types of use cases, what do those conversations look like as you're trying to either drive the up-sell there, or expand their adoption of the platform more broadly. I would love to get some more color on what those conversations look like?

David Meredith -- Chief Executive Officer

Yeah. So it's a great question. Thanks Matt. When we sell a use case around COVID, I mean they're still buying Safety Connection or modules in the core CEM platform.

And so once you do that, then you load up their information into the system and then immediately you've got several other use cases you can do with that. So from the first day if we're coming in like in my prepared remarks, I mentioned Muskogee Health is a customer that we originally sold vaccine distribution and now they're using the platform for other ways to alert and inform their constituents.  So we've I think had pretty good success in being able to do that. And now we're seeing with reopening there are some things that are the same where you're seeing a lot of workplace of the future type of initiatives, which play really well to our platform. We've always built a platform around knowing where your people are and monitoring threats wherever they are even if they're not at headquarters.

So that fits really well. But now there's more intense scrutiny on travel and the risks associated with travel now than we've ever seen. And you heard me say yearh and a half ago and a year ago that the travel risk management use case is pretty much completely dried up during COVID. And now we're seeing that come back really strong where people are starting to travel again and then also companies are having to go through and really look at how do they manage the risk of people traveling and then you've got the ISO 3130 regulation that's, or guideline that's come out recently, which people are trying to comply to.

So all that adds up to we're starting to see reopening of some of those use cases that we like to do like travel risk management.

Matt Stotler -- William Blair -- Analyst

Right, got it. That's helpful. And then maybe one just looking at the comment on the infrastructure bill passed, obviously, an interesting opportunity, maybe there's increased funding for some of these initiatives that you guys anticipated and benefit from. But, obviously, I mean government is a large bureaucracy and maybe a little slower moving.

So I mean as you're thinking about what that could mean and how that might layer in going forward? I mean what are your thoughts on timing and what that might actually look like as it starts to lay into the business.

David Meredith -- Chief Executive Officer

I think we would -- I would think we would expect to see maybe some benefits of that next year or like you said it could be longer but the time revenue flows in. But they're just projects that sometimes the federal government helps to fund it and that enables the state to move forward with something. Obviously, the 911 infrastructure there's a lot of opportunity to improve that and then continuing to modernize the messaging. We won an important deal to help power the front end for the presidential alerting system for the United States.

There's still other things that could be done there. So we see a lot of areas where potentially this could help to unlock some things. It's still very early and it's something we'll have to continue to update you on as we go forward.

Matt Stotler -- William Blair -- Analyst

Got it. Thanks again.

David Meredith -- Chief Executive Officer

Thank you.

Operator

The next question comes from Ryan MacWilliams with Barclays. Please go ahead.

Ryan MacWilliams -- Barclays -- Analyst

Hey, guys. Thanks for taking the question. So David after Spain in a number of public warning wins in Europe so far. How do you plan around building around these opportunities to capture the enterprise wins and these now Everbridge covered geographies?

David Meredith -- Chief Executive Officer

Yes, Ryan, thank you for the question. We've learned over the years for example in the state of Florida, when we won the statewide deal for the state of Florida over the years we've gotten to the point where we have 67 and 67 counties hundreds of cities over 60 corporations airports, train stations, universities, healthcare facilities. We built a regional resiliency ecosystem around that statewide deal and it's very value added for our customers to be part of that ecosystem and we're seeing it now in California and New York and some of the other statewide deals that we've won. And we see it also with the countrywide deals.

So if we just do our normal things over the years that will develop. And what we've done is put together playbooks to try and accelerate what will happen -- what would happen naturally. So in some of the countries we've already won we're running tests and doing different types of outreach to try to accelerate this network effect that we can get when we win the countrywide and statewide mass notification deal. So we do have plays that we're running on that.

And I think we're getting better and we're learning. And it's something we're really optimistic about as we go into the future. And we're not just limiting it to the European Union by the way. I mean we're talking to countries all around the world.

And so obviously, the EU mandate is an important catalyst there. But more and more we're creating standards for how this should be done. And really it makes sense for every country to have this type of capability given the overall risk profile whether it's coming from natural disasters, extreme weather events, cyber all of it. So it's an area that we're very excited about in terms of kind of building a moat around the business for the long-term.

Ryan MacWilliams -- Barclays -- Analyst

Thanks. Yes I think the New York City Housing Authority win kind of spoke to that. And then...

David Meredith -- Chief Executive Officer

Exactly.

Ryan MacWilliams -- Barclays -- Analyst

And then -- Just on Patrick from the billing standpoint, I know things can be really lumpy and you can't force countries to exactly the way you want. But just on billings in the quarter any seasonality? Anything to call out there versus the prior quarter? And then maybe RPO how that did in the quarter as well? Thank you.

Patrick Brickley -- Chief Financial Officer

Sure. Thanks, Ryan. Yes. Any individual quarters calculation of billings, will be subject to a lot of noise.

Seasonality can sometimes play a part but just the timing of transactions and the renewal of the transactions, etc., will create noise. We'll continue to focus people toward if they really want to look at billings, which is not a great metric for understanding our business, we'd say look at the trailing 12 month change in billings, which was up 42% year over year, that billing still doesn't among the noise or the things that don't even show up in billings are the deals that we've signed in the quarter that we've not yet invoiced for and that includes some of the countrywide wins and that's an uninvoiced backlog of still sort of in the mid-teens of millions of dollars. And the RPO is what we would encourage folks to look at before doing a billings calculation and that is up year over year by 36% the current version of subscription RPO, up 36%.

Ryan MacWilliams -- Barclays -- Analyst

Thanks.

Operator

The next question comes from Will Power with Baird. Please go ahead.

Will Power -- Baird -- Analyst

Great. Thanks. I guess a couple of questions. You all referenced the record number of 500,000-plus deals, wanted to just get more color on what's driving the increasing traction there seemingly each quarter? I mean is it companies taking more modules? Is it tied to added distribution that has a greater upmarket focus.

Just would love to get more color as to what's driving the larger and larger deals.

David Meredith -- Chief Executive Officer

Yes. Well, thank you. Great question. So it's multiple factors.

One is that we have been trying to sell higher into the organization. So if you start by selling into the C-suite and if we can into the board even that helps you drive bigger deals. Two is various bundling strategies. A lot of our competitors are selling point solutions.

And so one way we compete and try to avoid competing on price is by putting together a bundle of capabilities that is difficult for them to match because they just don't have those capabilities. And that's why you see we've been pretty aggressive with our strategic product road map, building out into new adjacencies. And I think that's been really helpful as we're going in trying to drive up the ASP. And then also there's just a higher awareness level of the importance of critical event management and overall resilience in an organization coming out of COVID.

And I think that does help us quite a bit. So it's a variety of factors but it's clearly a trend if you look over the last several quarters and it's something that we're going to continue to try to do more and more of.

Will Power -- Baird -- Analyst

OK. And I want to ask you a question on the EU front. I guess maybe Spain in particular looks like a really nice win. I know you noted that was a competitive process.

I'd love just some more color as to what you think set you apart from the other competitors both the front end and back end. And as you think about competition for some of these other EU deals, how might those differ from what you perhaps saw in Spain or not?

David Meredith -- Chief Executive Officer

Yes. Thank you. So we have the world's leading best solution for location-based SMS version of public warning. And then we acquired one-to-many which had the world's best solution for the cell broadcast modality of public warning.

And we've built an integrated hybrid front end that supports multiple modality public warning. And we filed for IP protection and we have that now patent approved its launch, it's going in with some of these new wins that we're getting. And so that – we think we have the best – in our opinion we think we have the best product. We think strategically by having a hybrid platform that supports all modalities that helps.

We have more integration than anybody particularly around 5G, type of modalities. People want to do multimedia messaging that sort of thing. And then, for some of these countries, they want to know that they're going with a partner who has the bench strength to actually get the solution integrated and delivered. So these are very large-scale complex implementations in some cases.

And I think Australia is a great example, where it's very public, it's very high profile for the country and it was a big deal to get the -- to go live with Australia this past quarter. And it's very high-stakes in terms of the use cases if you look at the bushfires and some of the other safety areas that this is used for in Australia. So I think the fact that we've got so many implementations I think we're sort of a safe choice and we can also be relied upon to help really manage and drive the implementation in a timely manner. And we've gotten that feedback as well.

Will Power -- Baird -- Analyst

OK. Thank you.

David Meredith -- Chief Executive Officer

Thank you.

Operator

The next question comes from Parker Lane with Stifel. Please go ahead.

Parker Lane -- Stifel Financial Corp. -- Analyst

Hi, guys. Thanks for taking my question. I think it's been about six months since you acquired xMatters. Love to hear about the joint selling motion between, your IT Alerting solution and xMatters and the progress of some of your existing customers taking on some of the capabilities you acquired in that deal?

David Meredith -- Chief Executive Officer

Yeah, Parker thanks for the question. We're getting great feedback on this concept of a digital-physical fusion center where you can manage your risks across both with a single pane of glass and a common operating system. And I think it's the way of the future. And the lines blurring you see something starts with a ransomware attack and all of a sudden people can't get gas at the gas station.

And it goes back and forth physical to digital, digital and physical. So it makes sense to have a one vendor partner that can support that across everything. So I think people are resonating with the message. Obviously, with the xMatters platform it was many years of development really nice system, interface, functionality, use cases, digital operations.

It's -- it really adds a lot of capability to what we were doing with our IT Alerting. And we're already doing integrations, right? So we've got that integrated now with our crisis management module. We've got to integrate it with our employee communications module integrated with our Visual Command Center. So people are seeing the value of it coming together over time and giving us really positive feedback.

Parker Lane -- Stifel Financial Corp. -- Analyst

Great. And then on the broader enterprise opportunity relative to pre-COVID, how have the sales pitches changed across the verticals you're playing in? I mean some organizations are going back to the office. Others are doing fully remote workforces going forward. Can you just talk about how that actual sales pitch has changed in the value proposition, you're trying to drive for customers, how you're communicating that in this new world?

David Meredith -- Chief Executive Officer

So one thing that stayed constant is the ROI. So the ROI use cases are going to sell well. Forrester came in and did a study and talked to a bunch of our customers and said, there's a think a four month payback period for CEM. So if you can do -- is that help to enable revenue or help them to run their business more efficiently and then you kind of fund, the insurance policy piece of it.

That's really compelling. As our retail customers have been reopening their stores. We've been helping them with that. That's enabling their revenue.

More and more reliance on digital, so the IT alerting, CEM for digital in terms of reducing IT downtime is a very easy ROI case, because it's so expensive to have that downtime. So that's really important as far as specific use cases. Definitely now, people are very focused on workplace for the future. There's a lot of competition for talent and hiring and companies are having to be more flexible in terms of how they support their workforce and let them work remotely and have hybrid models from that perspective.

And definitely our system built around Safety Connection is really built to do that. So the workplace of the future initiatives play really well with what we're doing and we're definitely emphasizing that in the sales. And then, most recently we're seeing in just recent weeks and last few months, travel -- business travel is coming back with a vengeance. And people want to make sure that they're doing everything, everything they can to mitigate risks around business travel.

So that's an area we see a lot of opportunity in.

Parker Lane -- Stifel Financial Corp. -- Analyst

Very helpful. Thanks, David.

David Meredith -- Chief Executive Officer

Thank you.

Operator

The next question comes from Brian Peterson with Raymond James. Please go ahead.

Unknown speaker

This is John Martino on for Brian. David, I know that the partner channel has been something that's gotten a lot larger focus since you've joined. And it's good to see Deloitte added as a partner in EMEA. But maybe give us a little more color on the broader efforts there and how those are progressing? And where do you think those efforts are as far as full potential of breadth of expansion there?

David Meredith -- Chief Executive Officer

Yes, John, thanks for the question. We want to have multiple routes to market and multiple ways to drive distribution in addition to just the direct sales force that we've always had. So there are different categories of partners. We've got global system integrators and we've got other product ecosystem partners.

We have hundreds and hundreds of integrations. And so, where we have a technical integration, we try to also turn that into a go-to-market partnership. We have the agent community. And then we have industry vertical specific partners.

For example, we announced a partnership a few quarters ago where we're going and helping with critical infrastructure around nuclear power plants, that sort of thing. So all of these really help to drive overall deal flow, a number of that bets, and so sometimes it could just be a referral and sometimes it's going in as a whole package deal. And I think also, we had a question earlier about big deals. In a lot of cases some of these deals are bigger than our average deal, for example, our largest contract in the state of California and that came as part of a partner deal with a global partner.

In a couple of cases now, we've gotten partners to sign up for a reasonably significant annual minimum commitments and that always helps to and it shows their confidence in their ability to help sell what we have. And then, more and more you're seeing we're partnering with professional services type firms, where there's very little overlap, but they're going in on a consultative basis and helping advice enterprises. And then, for them it's a natural extension to say, a lot of these best practices are supported by this industry-leading SaaS platform from Everbridge. And by putting that in you can make a lot of these improvements.

So, it's a good fit. I think in terms of where we are in our overall progression, we've built out our partner portal and our processes and our whole way we support partners. That all had to be stood up over the last year or so. Now, I think we expect to see it start to accelerate more.

But I think, it's still second or third inning in terms of what it could potentially be at the end?

Unknown speaker

Perfect. Thank you very much.

David Meredith -- Chief Executive Officer

Thank you.

Operator

The next question comes from Koji Ikeda with Bank of America. Please go ahead.

Unknown speaker

Hi. Thanks for taking my question. This is actually Lori Lord calling for Koji. Just want to follow-up on that funding comment previously.

So I was wondering, what is the current average product per customer, and could you remind us on how that has trended since IPO.

David Meredith -- Chief Executive Officer

Hi, Lori. Thank you for the question. Yeah, we think it's a big growth opportunity for us. The average number of products per customer is a little below two.

So we probably have 11 different products that we could be selling. So, we see a lot of opportunity now with over 6,000 enterprise customers to cross-sell and upsell. And so we see that as a big growth driver for us going forward. Thank you.

Unknown speaker

Great. Thanks.

Operator

The next question comes from Brian Colley with Stephens. Please go ahead.

Brian Colley -- Stephens Inc. -- Analyst

Hey, guys. Thanks for taking the question. So, I wanted to ask about xMatters. I'm curious how the increase in ransomware attacks, is kind of impacting the pipeline for the xMatters solution.

And also how is xMatters performing from a top and bottom-line perspective relative to your initial expectations?

David Meredith -- Chief Executive Officer

Yeah. Thanks for the question, Brian. We're not a cyber company. We don't compete with those companies but when a cyber attack does happen, it becomes a critical event.

And so, we really work hand in glove with the companies that sort of protect the endpoint. So as you see an increase that does affect things like digital operations. It affects IT uptime and overall productivity, and that is squarely in the CEM category. So it definitely allows us now to go have more robust and better conversations with well-funded personas like the CIO, CTO of an organization.

So from that perspective it's been very helpful. Overall, we're not really breaking out the xMatters because we had an existing IT business and we kind of put those things together. But I think overall xMatters has been kind of what we expected. I don't know Patrick there's more you want to add on that.

Patrick Brickley -- Chief Financial Officer

No. To your point it's performing as expected. We've integrated the people. We've integrated the sales.

We've integrated the funnels. We're integrating the technology. So we don't break it out. But so far so good.

Brian Colley -- Stephens Inc. -- Analyst

Got it. That's helpful. On the public warning side, I'm curious how quickly do you think some of these larger wins like Spain will translate into expansion wins within the country enterprise customers or other municipal customers?

David Meredith -- Chief Executive Officer

Well, we're going to go spread the word ASAP. And it just helps when you go and say that the country is done and extensive RFP process and we were selected and we're powering. I mean we see it in the United States where we have several hundred municipalities and their fallback system is the federal government which we also helped to power as well. And so it's just a natural conversation at least from a marketing and sales perspective and sometimes there's other benefits as well.

So it's probably -- in some of these countries we have better sales coverage than others. So in some places we need to go and hire more salespeople to get better coverage. Where we have better sales coverage like in Australia, we are seeing deals starting to come through from that. And then in other places we probably just need to hire some more salespeople.

Brian Colley -- Stephens Inc. -- Analyst

Got it. Patrick just to quick housekeeping question for you. Can you provide the breakdown of professional services revenue versus software license and subscription?

Patrick Brickley -- Chief Financial Officer

I can. That's in our 10-Q which we filed concurrently. And I could follow up with you after that. But it's definitely -- it's been published to our website and filed with SEC.

Brian Colley -- Stephens Inc. -- Analyst

Thanks for the time, guys.

Patrick Brickley -- Chief Financial Officer

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to David Meredith for any closing remarks.

David Meredith -- Chief Executive Officer

Well, I just want to thank everyone for joining our call today. We're excited about our consistent execution which drove results that exceeded our guidance and we're looking forward to closing out a record year as we continue to leverage our market leadership to penetrate the multibillion-dollar opportunity we're addressing. We hope to see many of you at the Stephens and Credit Suisse conferences over the next few weeks. Thanks again.

Bye-bye.

Operator

[Operator signoff]

Duration: 59 minutes

Call participants:

Patrick Brickley -- Chief Financial Officer

David Meredith -- Chief Executive Officer

Scott Berg -- Needham and Company -- Analyst

Sterling Auty -- J.P. Morgan -- Analyst

Matt Stotler -- William Blair -- Analyst

Ryan MacWilliams -- Barclays -- Analyst

Will Power -- Baird -- Analyst

Parker Lane -- Stifel Financial Corp. -- Analyst

Unknown speaker

Brian Colley -- Stephens Inc. -- Analyst

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