Everbridge [EVBG] Conference call transcript for 2022 q2
2022-08-09 22:35:02
Fiscal: 2022 q2
Operator: Good day and welcome to the Everbridge, Inc. Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Nandan Amladi, Investor Relations. Please go ahead, sir.
Nandan Amladi: Good afternoon and welcome to Everbridge's earnings conference call for the second quarter of 2022. This is Nandan Amladi, Vice President of Investor Relations. With me on today's call are Dave Wagner, our new CEO; Vernon Irvin, Executive Vice President, Chief Revenue Officer; and Patrick Brickley, Executive Vice President and Chief Financial Officer. 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 earnings press release, which you can find on our Investor Relations' website. Our earnings press release, which crossed the wires aftermarket close included highlights from our second quarter in addition to the financial results and outlook. After we review our business and financial highlights, we will open the call to questions. With that, let me call -- turn the call over to Dave.
David Wagner: Thank you, Nandan. I am excited to join Everbridge as Chief Executive Officer of this important moment in the company's evolution. Everbridge is a pioneer and is the clear industry leader in critical event management and public warning. Everbridge offers powerful solutions for positive change with the ability to keep people safe and businesses running smoothly. We have opportunities ahead of us in both the near and long-term to grow this business, improve our efficiencies, and create shareholder value. I would like to take a quick moment to introduce myself. I have been working at B2B software companies for nearly 30 years, and I have been fortunate to be on teams that have created more than $2 billion in shareholder value. I have been part of an IPO, a go private and two sales, two strategic buyers. Most recently as CEO of Zix, we grew revenue, EBITDA and enterprise value each by more than 400% over less than six years. This growth was both organic and inorganic. We completed and integrated seven acquisitions successfully. In short, the teams I've led have created value in a range of ways and I look forward to creating value with the team at Everbridge. In the near-term, the team and I continue to focus on executing for strategic priorities. First, we are simplifying our product offerings and our go to market channels to improve sales productivity and drive organic growth. Second, we are focused on extending our global leadership and public safety systems with our industry leading platform to enable our proven network effect. Third, we are working on strategic product integrations, making it easier for customers to adopt new solutions while extending the differentiation of our platform. And finally, we are increasing overall efficiencies and increasing profitability across the company. Everything, the leadership team and I are doing is focused on improving momentum, creating value for our customers, increasing profitability and increasing shareholder value. As Vernon and Patrick will share, the team is demonstrating progress on each of our focus areas. Our second quarter results are an affirmation that our strategy is working and that our execution is improving. As I am quickly coming up to speed, I am impressed with the level of commitment our team members have to both our mission and to our customers. Enterprises and governments are increasingly focused on resilience and as a result, our customers are relying on our solutions more than ever. I look forward to partnering with Patrick, Vernon and the entire Everbridge team to build on our commitment to growth, improving profitability and increasing shareholder value. I will now turn the call over to Vernon to review our business highlights.
Vernon Irvin: Thank you, Dave. Thanks to all of you for joining us today. We delivered solid second quarter results and increased large enterprise deal momentum demonstrating that our recent actions to streamline integrate and reduce complexity occur As our product portfolio are beginning to pay off for our customers. Our second quarter results came in ahead of expectations with revenue of $103 million, up 19% from a year ago, and adjusted up of $4.8 million. Let me give you a few examples of our success during the quarter. Our persona-based solution pillars are gaining traction with our enterprise customers. As a reminder, these four strategic pillars are digital operations, business operations, people resilience, and smart security. The breadth and depth of our platform is unmatched in our industry. We added 121 enterprise customers and 20 CEM customers and grew many more including a leading Fortune 500 industrial firm, a leading pipeline company in the North American energy market, and six major financial institutions. Our deal sizes continue to grow. We signed 63 deals over $100,000; five deals a $1 million demonstrating our persona-based selling is gaining traction. In public safety, we demonstrated the power of network effect, right growing business with several of our existing national customers. In Germany, we won the third major mobile network operator to deploy our public warning cell broadcast technology, expanding our reach to over 70% of mobile subscribers across Germany. In Peru, we delivered a successful national test of their early warning messaging system. The system which uses Everbridge's public warning platform was activated across more than 22 million mobile phones. In Iceland, the first country to win our best and resilience designation, the government uses our system to warn all hikers and travelers of dangers around volcanic eruptions. In higher education, we renewed and grew our presence in several top universities to better protect their student community, at nationally ranked West Coast schools including USC and UCLA and two Ivy League schools. And on the integration front, travel risk management and critical event management are now a single SaaS solution called Everbridge Assist, powered by Anvil. As the hybrid workforce defines -- redefines duty of care, we remain well-positioned with the markets only in the end solution that combines people resilience and travel risk management. Another example is the launch of service intelligence part of the digital operations platform built around xMatters. We can now provide IP responders with advanced analytics and dynamic runbook automation for faster recovery and reduce business impact. And our risk guidance team continues to execute well, bringing in several six-figure E911 deals with enterprises in state, local agencies, mainly through partners. And other focus area to drive our long-term growth and post during our go-to-market programs by building out channel and reseller partnerships supplementing our direct sales with indirect sales. In the second quarter, over a third of our new and growth business during the quarter, particularly internationally, came through the expanded channel network, up from just around 10% a year ago. In fact, some of the largest deals are now being led by channel partners, including the German mobile operator and a leading industrial Fortune 500 firm. We also expanded our channel presence in Mexico through our partnership with Grupo Siayec, a leading provider of digital and physical security solutions. Finally only industry fund front. Our best Resilience Program now includes Humana, Exact Sciences, Johnson Controls, and a latest brand to achieve this prestigious certification, a resilient organization assures that employees assist resources and assets and resources and communities are protected from and prepared to migrate to impact of critical events. Also during the quarter, our enterprise IP and cyber resilience solution, xMatters was named a leader in sole outperformer in the 2022 GigaOm Radar Report for incident and task management solutions. The report evaluate service providers based on a range of key criteria, including technical capabilities, product roadmap, innovation and ability to execute. In summary, we've made measurable progress on our priorities in the first half of 2022. As we look ahead to the second half of the year, we expect that our simplification strategy to make our CEM bundles easier to buy, while continuing to drive growth. increasing profitability is being delivered by a combination of more efficient selling and larger deal sizes. Now, allow Me to turn the call over to Patrick for more details on our financial results, as well as our guidance for Q3 and the rest of 2022. Patrick, over to you.
Patrick Brickley: Thanks Vernon. At the halfway point in the year, we have delivered on our growth and profitability targets and we have achieved planned milestones related to our strategic realignment of resources. We are on track to achieve mid-teens adjusted EBITDA margins exiting this year and we remain focused on driving sustainable revenue growth with increasing profitability. I'm pleased to see solid execution that produced revenue and adjusted EBITDA that were above our guidance range. Revenue in the second quarter was $103 million, up 19% from a year ago. During the quarter, we experienced over $1 million of revenue headwinds related to foreign exchange and we anticipate those headwinds will continue for the remainder of this year. Adjusted EBITDA was $4.8 million, which reflects improving operating leverage, as well as execution of the strategic realignment program that we initiated in May. Through June 30th, we incurred nearly $10 million of expense related to the strategic realignment and we remain on track to hit our stated overall realignment targets of investing $13 million to $21 million in order to reduce annual run rate expense by $13 million to $18 million. We ended the quarter with a cash balance of $475 million. For full details of our P&L and reconciliation of GAAP to non-GAAP measures, please refer to our press release. Total deferred revenue was $233 million, up from $210 million a year ago, but down sequentially from $246 million at March 31st, 2022, reflecting the usual organic seasonality of our business. Note that deferred revenue at June 30, 2021 was positively impacted by the acquisition of xMatters, which brought $34 million of deferred revenue on its opening balance sheet. Total remaining performance obligations from subscription and other contracts was $443 million. While current remaining performance obligations with $279 million. Our net retention rate continues to track at or above 110%, reflecting continued customer satisfaction, combined with demand for additional Everbridge technology to expand within the existing customer base. Our momentum with large transactions continued in Q2 resulted in trailing 12-month ASPs that were again above $100,000. Additional business metrics can be found in our Investor Relations presentation posted on our website. Now, I'll turn to guidance for the third quarter and full year. For the third quarter, we anticipate revenue of between $110.6 million and $111 million, representing growth of 14% to 15%. Adjusted EBITDA will be between $13.5 million and $13.9 million and we anticipate non-GAAP net income of between $7.5 million and $7.9 million or between $0.16 and $0.17 per diluted share. For the full year, we are reiterating our revenue guidance range of $428.2 million to $432.8 million, representing growth of 16% to 17%. This outlook assumes more than $1 billion of foreign exchange impact in each of Q3 and Q4. Similar to what we experienced in Q2. We anticipate adjusted EBITDA will be in the range of $37 million to $39 million, more than tripling from 2021 and representing an adjusted EBITDA margin of 9%. Further, we expect to exit the year with adjusted EBITDA margins in the mid-teens. We expect non-GAAP net income of between $15.7 million and $17.7 million, or between $0.33 and $0.38 per diluted share, based on 47 million diluted weighted average shares outstanding. In summary, we delivered a solid performance in the second quarter. As we progress through 2022, we are very focused on execution, driving organic revenue growth and maximizing return on our investments. Looking further, we believe we can deliver sustainable topline growth with improving profitability and positive cash flow, which can generate significant long term value for all of our stakeholders. Now, operator, we are ready to open the call for questions.
Operator: We will now begin the question-and-answer session. Our first question comes from Michael Turrin with Wells Fargo Securities please go ahead.
Michael Turrin: Hey there. Thanks. Appreciate you taking the question. David, congrats on joining. I think the first question for me is just I'm curious if there are any changes in buying behavior, seeing or hearing number of software companies talk about elongation of sales cycles, we know there is a critical need for your solution. So, wondering if there's anything with the bundling strategy or anything you're seeing from a targeted industry perspective or elsewhere that could suggest any change there at all?
Vernon Irvin: Hello, Michael, this is Vernon Irvin. Thank you for the question. We've observed with our businesses that resiliency and business continuity, continue to be at the forefront and concern of most of our enterprise and public sector customers. And we don't have -- not seeing any notable headwinds due to global economic conditions. So, again, I think resiliency and business continuity seems to be top of mind for customers, but we keep a watchful eye in the marketplace.
Michael Turrin: That's helpful. Just one on the metrics if I may as well. I know billings is not the best indicator, given you've talked about timing or those impacts, appreciate the reminder, on X matters on the year ago compare, but it's down sequentially, again here in the second quarter, which is maybe counter to some of the commentary around deal sizes and the increase there. So, just any impacts and be mindful of whether it's duration or transition related impacts. So, you can just bring our attention to anything you could just add if there's any indication of where those could stabilize, I think is helpful. Thank you.
Patrick Brickley: Yes, that's a metric that we don't run the business to in terms of just sort of zooming out and looking at the progress that we're making, we're continuing to see signs of progress in sales productivity, we're also continuing to execute on a strategic realignment which part of that is deemphasizing and shedding non-core technology and customers and revenue that relate to that. So, there are--
David Wagner: And if I could interrupt, Patrick and I spoke think about just remind you that Q1 and Q2 is sequentially That's your sequentially organic would be the way the billing cycle of our government customers works that being down sequentially, organically, Q1 to Q2 is not inconsistent with the trends the business has had for a long time.
Michael Turrin: Helpful. Thank you.
Operator: Our next question comes from Ryan MacWilliams with Barclays. Please go ahead with your questions.
Ryan MacWilliams: Hearing about your strategy objectives, would you say are some things Everbridge can improve on for the rest of this year? And how do you think about what a healthy growth profile for Everbridge can look like over time?
David Wagner: So, those are great questions. And when I talk to the Board members, what the outside and things myself, that the four strategic priorities that the team has already working on -- I think are the absolute right things to do right. So, simplifying our products to drive your organic sales velocity. Folks on their networks -- public safety with a network effect were engaged nice examples there. Making it easier building path to platform for more and more of our customers and then you're increasing our efficiency. So, I think these are the right things to be focused on each things that I've come to algebraic with experience, that hopefully I'm expecting -- I'm hoping I'm expecting to be able to help the team further and improving these areas. That's what our heads down, focusing on now. And as we do those this sustainable growth opportunity, which I think you'll remain strong, you will get a much better indication of what that looks like in the quarters.
Ryan MacWilliams: Appreciate the color. And then just on bookings linearity, any changes to bookings, as we move through the second quarter, and then into July as well. And also, do you see any changes in churn in the second quarter? Thanks.
Vernon Irvin: Yes. No, we track linearity pretty closely on bookings and I think we continue to see that the strategy that Dave just laid out, continues to provide us with the right strategy and the right runway to continue to maintain our momentum. So, I don't have any further comment on that. And what was the second part of question, I'm sorry?
Vernon Irvin: Any changes in churn?
Vernon Irvin: No, I think we also see sort of continued trends in the business as well, but no additional comment on term.
Ryan MacWilliams: Okay, excited to see more details, what's coming next? Thanks guys.
Operator: Our next question comes from Scott Berg with Needham. Please go ahead with your question.
Scott Berg: Hi, everyone, congrats on the quarter and thanks for taking my questions. And I echo the welcome, Dave.
David Wagner: Thank you, Scott,
Scott Berg: You bet. Vernon want to start with -- what you're seeing with your enterprise corporate customers today in terms of general demand trends. If you look at the business today versus maybe right before the pandemic, the customer, are the contract ASC sizes are increasing a little bit. But how are those customers buying your solution differently today versus maybe two and a half years ago?
David Wagner: Yes, look, I think the importance of resiliency and business continuity is top of mind for lots of large corporations around the world. And that has given us the ability to be able to position our platform strategically with a lot of those large enterprises and public organizations. As a result of that, we obviously aligned our new pillar strategy to make sure we make a buying journey, very simple for our customers to understand it, and we build it by persona. So, from our perspective, we think that the importance of resiliency and business continuity align with a simplification of the strategy that Dave talked about. And the pillar strategy, I think, is very timely, and is -- we were able to show this quarter and a little last quarter, we're starting to see early progress there. And it is early. It's only been a few months. But we have seen early evidence that the platform and pillar strategy is allowing customers to see sort of their journey as they align the importance of resiliency and business continuity with Everbridge CEM.
Scott Berg: Great. And then from a follow-up perspective, I wanted to touch on the business coming out of EU with the mandate there around population alerting and such, how should we think about that opportunity today? Kind of where are we in the process? I think most of us understand that. A lot of those selection cycles are supposed to be done this year with the original timeframe. But as you sign another, telco within Germany, is that opportunity, maybe 50%, 60%, 70% through the buying decisions for what those customers are doing, or is there maybe, more to come here in the second half 2023 for Everbridge? Thank you
Vernon Irvin: Yes, the public winning business for us in the EU, Everbridge, I think has been able to demonstrate that its cell broadcast, public warning platform is one of the best in the industry, particularly with our front end. We're proud that we were able to win the largest country in the EU with Germany and recent when we announced in the second quarter. To give you sort of a feel for further opportunities, there are significant over 12 different European countries RFPs and RFIs that we continue to compete for that many of the large companies like obviously Spain, U.K., and Germany, have picked Everbridge, its ability to be able to warn its citizens and duty of care for its country. But there are still close to 10 other European countries that we are positioned with in the marketplace. And then because it's a global business, we also have a number of countries that are outside the EU that will continue to pursue as well in Asia-Pac and Africa, and the Middle East.
Scott Berg: Thanks. Congrats again.
Vernon Irvin: Thank you.
Operator: Our next question comes from Koji Ikeda with Bank of America. Please go ahead with your question.
Unidentified Analyst: Hi, is Laurie on for Koji. Thanks for taking my question. This one from us. First, David, congrats on joining the team. Looking forward to working with you. So, I was wondering how you're thinking about the current sales capacity in order to reach your near-term growth? Are you sticking with your hiring plan for the beginning of this year? Or has testing changed? And are there any other changes on your go-to-market strategy that you're currently evaluating to drive the higher efficiency this year?
Vernon Irvin: Yes, look, I primary directive is to continue to the growth company and we continue to be active in making sure that we hire our go-to-market teams, particularly our sales organizations around the world. So, that is a top priority. We also continue as Dave talked about, and Patrick talked about continuing to also want to improve our bottom-line. So, we're mindful of making sure we operate efficiently. But most of the growth and go-to-market, we continue to make those investments. One of the pivots that we have made Lauri is as I said in the prepared remarks, we continue to pivot more and more also to our indirect channels. We think they're more efficient cost structures there, more effective velocity and winning large bill deals around the world. So, you'll continue to hear progress as it relates to sort of making sure that indirect becomes a more prominent part of our business as we've seen some significant progress, particularly outside of the United States. So, if there's a one point of clarification around go-to market, it would be that I think that indirect will continue to strengthen and allow us to produce a more efficient bottom-line on our go-to-market.
Unidentified Analyst: Yes, that's helpful. Thank you.
Operator: Our next question comes from Brian Peterson with Raymond James. Please go ahead.
Brian Peterson: Hi, gentlemen, thanks for taking the question and David, welcome. Welcome to call, look forward to working with you. So, Patrick, I do want to follow-up with billings. I know it's not a favorite topic. I know you don't run the business to that metric. But we've seen some quarters of volatility. Is there any way you can just comment on how maybe in total bookings compared versus expectations? Again, I know billings isn't the perfect metric, but like -- just want to make sure we're getting the right kind of read through here, because it sounds like a qualitative commentary on -- the enterprise are fairly in everything you're trying to do is really going well. So, just want to make sure we're on the same page here.
Patrick Brickley: Yes, seasonally, Q2 is the softest quarter for a number of metrics. Now, we had a solid Q2, but when you look at externally calculated metrics like billings, and you adjust for the quarter -- in the quarters, where we have acquired deferred revenue, when you adjust for that, looking back over time, you'll see that Q2 has historically been sequentially down from Q1 on that metric, and then jumps back up and Q3 and Q4. So that's, that pattern has always been there. And we would anticipate that that will continue this year as well.
Brian Peterson: Got it. And maybe just a follow up on that guide, just clarifying. I sounds like the guide kind of embeds an incremental $3 million in FX headwinds. Is that right? And maybe any color on to the broader macro assumptions that you have the updated outlook. Thanks, guys.
Patrick Brickley: Yes, that's it, Brian, at a high level, where you heard Vernon talk about trends, of course, we're trying to be prudent with our guidance as always. And we've got a few moving parts. But we're, we're excited. We think that we're on track and we're making progress in terms of continuing to, to focus the business on long term sustainable organic growth. Good progress to date. We've got more work to do.
David Wagner: Thank you, Brian. Yes, and Brian thank you for the kind welcome. Look forward to working with you as well. Appreciate you being clear on the FX headwinds that we've incorporated into the guide.
Operator: Our next question comes from Brian Colley with Stephens. Please go ahead.
Brian Colley: Hi, guys. Thanks for taking my question and Dave, congratulations on the new position.
David Wagner: Thanks Brian.
Brian Colley: So, Vernon I'm curious just as I look at the new bundles, kind of which categories are you seeing the most success today?
Vernon Irvin: A couple of them particularly in the so the answer almost reasonably, but certainly the people resilience is the one that we can point to. Also the business operations pillars pretty strong for us. And then last but not least, we're seeing some nice momentum on our Smart Security platform, one of the largest financial institutions in the United States signed a pretty significant seven-figure deal with us. So, those are the three that are resonating pretty well. And we're also have a mindful eye on digital opportunity to write as companies are pivoting, the more and more of their business operations where we think physical and digital are merging together, we think seeing for digital is very prominent place that we're excited about, obviously, leveraging the xMatters' asset.
Brian Colley: Got it. That's helpful. Thank you. And then also were to ask about the EU, can you just give an update on what you're seeing in terms of top down, network effect type business, and some of the larger countries that you've won recently?
Vernon Irvin: As you know we have -- we -- when I think about the recent win in Spain, we also were able to win one of the larger financial institutions that are based in space in Spain and that's a really good example of leveraging the network effects. We believe that the strategic relationship that we started with in Germany with Siemens , was instrumental and making sure that we were able to go to the country of Germany and leverage that significant when there were we announced the latest country there. So, there are a couple of real good examples where winning the country helps pull in enterprise or winning -- I'm sorry winning the country helps you with enterprise or having a large enterprise helps you win the country. So, network effects is absolutely something that they will stay focused on.
Brian Colley: Got it. I appreciate that. I'll leave it there.
Vernon Irvin: Thank you.
Operator: Our next question comes from Parker Lane with Stifel. Please go ahead.
Matthew Kikkert: This is Matthew Kikkert on for Parker. Thanks a lot for taking my questions. And Dave, welcome to the team. Thanks, Matthew.
David Wagner: Thanks Matthew.
Matthew Kikkert: First off, I wanted to start with the competitive landscape. Have you seen any competitive challenges and pricing pressures continuing internationally? Are you seeing these start to dissipate?
Vernon Irvin: So, we operate -- if the question is specifically internationally and not domestically, I'll answer it Matthew internationally. We sort of run two product categories, obviously, our world-class Everbridge CEM SaaS platform, we operate and we have a variety of products and capabilities that compete there in the marketplace. We don't see competition at the CEM level, where we're able to deliver the single pane of glass for resiliency and business continuity. At the individual product level, call it mass notification or risk intelligence. There are a number of individual players that we compete with in those marketplaces. And then, as I speak about public warning platform, Everbridge has been very successful and dominant in our win rate and our ability to be able to address the EU mandate and public warning. So, we don't see any big competitors. There are some smaller competitors that are very, very price-oriented. But the reality is when we're able to speak to customers about our L Bass and our public warning platform with cell broadcasts, plus the front end, it does provide a nice competitive mode for us. But there are very small public warning competitors and there are also smaller competitors in the resiliency business continuity, but not at the CEM level. That makes sense.
Matthew Kikkert: Okay, that makes sense. Thank you. And secondly, I want to zoom out a little bit. What changes in new perspectives do you expect coming from the addition of Dave as the CEO? And then specifically for you Dave, what attracted you to the position at Everbridge?
David Wagner: Yes, so I'll take that both halves of it. In terms of changes, I see the strategy that we're on improving pretty good efficiency, title integrated products, making these paths to platform through product and easier product integration, improving our profitability, these are things that that need to be done. The team is on the right track, we're making progress against these objectives and we're going to continue to focus on moving those forward. I'm really excited to join Everbridge, it's a clear leader in an important part of the market with a very clear mission and purpose that that ultimately results in saving lives and so I'm finding a really deep commitment among the employee base to mission. I'm deeply committed to that mission, as well and then I look at from when I'm joining the shareholder value creation opportunity here, I think is really good. And so we're going to continue to focus on driving the growth and making sure that we're increasing our profitability at the same time, which I think as we do that it's going to be good for our customers, our colleagues, and our shareholders alike.
Matthew Kikkert: Great. Thank you very much.
Operator: Our next question comes from Matthew Stotler with William Blair. Please go ahead.
Matthew Stotler: Hi, everybody. And Dave, good to meet you virtually. Look forward to working together going forward. Thank you for taking the questions. I guess first one, just a question on large deal pipeline, obviously, seems to be pretty healthy in the quarter. Something we've seen in prior slowdowns is a kind of a shift in customer buying patterns towards, kind of, smaller -- near-term high near term ROI, low risk deployments versus large purchase decisions. Is that something that you're seeing today? And then is that -- on the other hand, as you move to a bundled approach, do you still have the ability to kind of sell these smaller high near-term ROI solutions that customers may look for if we do have more of a slowdown the back half?
Vernon Irvin: Excellent question and thanks for asking that, Matt. One of the things that we position as part of our pillar strategy was, obviously a journey map to be able to go to a large enterprise or public safety company, and give them the ability to on ramp on their way to a journey to see. So, each of the packages that we rolled out has a level called Essentials, which is the sort of low end of the marketplace where a customer can sign up for our risk intelligence solutions, or a mass notification, or some workflow design products we have, and then be able to very quickly migrate up to the next level, which is what we call our standard package, where they can then sort of add another set of services around our control center or Admin Pro. And then obviously, full blown CEM is the advanced product where now you're looking for holistically security for internal, external, digital, as well as physical threats and become a full CEM customer. So, I think that optionality that we rolled out in the marketplace gives customers a journey map to say, hey, look, due to economic conditions, we like the journey for CME, but we're want to just start with the essential package. And we think we are an existing customer that's already essential, that migrate to intermediate and to advance. So, that strategy again, got rolled out pretty early on, but we're seeing in the cases, that was the right direction to go in.
Matthew Stotler: Got you. Thatâs very helpful. And then just one follow-up, you've talked historically about this kind of eight-figure backlog that in prior periods had been kind of expanding or increasing a little bit. Any update on what that looks like and whether that's still increasing or decreasing in size?
Patrick Brickley: Hey, Matt, its Patrick. No material change this quarter relative to last quarter, sort of, what we delivered in revenue we replaced with sales.
Matthew Stotler: Got it. Thanks again.
Patrick Brickley: You bet.
Operator: Our next question comes from Stuart Goldberg with Kettle Hill. Please go ahead with your question.
Stuart Goldberg: Hey, guys, thanks for taking the question. Want to know about the channel partner, so what other details can we talk about for the quarter? And what we've learned . What have you learned about realized pricing through the channel partners if anything at this point?
Vernon Irvin: Yes, absolutely. Thank you for the question, Stuart. This is Vernon again, I -- one of the things that we do see when we engage the partner organization is greater deal velocity. Part of what we hear from customers is they have strategic partners themselves whether they're system integrators or consultancies, or some of the partners that announced Booz Allen and Pricewaterhouse, Deloitte, and Atos, Control Risk. And most of those companies that I mentioned, have their own business continuity practice, and have had with the C suite for quite some time. We're finding that as unlocking as an actual solution to deliver was antsy from a digital transformation perspective. And that is what the CEM platform does. So, aligning our CEM platform with these large consultancies or SI, is again, the ability to connect with their C level relationships, which is the velocity component with our combinations are ones that we're seeing I would say pricing isn't a topic we were doing these things at market rates and there is no differentiation in a pricing from using our partnership.
Stuart Goldberg: Great. Thanks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to David Wagner, CEO for any closing remarks.
David Wagner: Thank you all for joining Everbridge's second quarter earnings call. We look forward to meeting with many of you during the quarter and speaking with most of you again, as we give our update after Q3. Thank you very much and have a good evening.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
