Aug 5, 2017
Executives
Kenneth Goldman - SVP and CFO Jaime Ellertson - Chairman and CEO
Analysts
Brad Sills - Bank of America Merrill Lynch Tom Roderick - Stifel Alexander Hu - Credit Suisse Terry Tillman - SunTrust Robinson Humphrey Kevin - Raymond James
Operator
Good day, ladies and gentlemen, and welcome to the Everbridge Second Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode.
Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded.
I would now like to introduce your host for today's conference, Ken Goldman, SVP and CFO. Please begin.
Kenneth Goldman
Good afternoon and welcome to Everbridge's earnings conference call for the second quarter of 2017. This is Ken Goldman, Senior Vice President and Chief Financial Officer of Everbridge.
With me on the call today is Jaime Ellertson, CEO and Chairman. After the market closed today, we issued a press release with details regarding our second quarter results, which can be accessed on the Investor Relations section of our Web-site at ir.everbridge.com.
This call is being recorded and a replay will be available on our IR Web-site following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws.
These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today.
For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC including our recent 10-Q and 10-K filings. Also during the course of today's call, we will make reference to certain non-GAAP financial measures.
A reconciliation of GAAP to non-GAAP measures is included in our press release. Finally, at times in our prepared comments or responses to your questions, we may offer metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business or our quarterly results.
Please be advised that we may or may not continue to provide these additional details in the future. With that, let me turn the call over to Jaime for his prepared remarks.
Jaime Ellertson
Thanks, Ken, and welcome to all of you joining our second quarter of 2017 earnings call. This is our fourth earnings call since our IPO last September and we're excited to have delivered another strong quarter with both revenue and adjusted EBITDA coming in above our guidance ranges.
Revenue of $25 million increased 35% from a year ago, with strong growth from our core and new products in the form of larger as well as greater numbers of multi-product transactions than in any previous quarter, and with our balanced approach to revenue growth and profitability, we were able to deliver substantive sequential improvement in our adjusted EBITDA in parallel with our solid revenue growth. Our Q2 results reflect the market momentum we continue to see as organizations increasingly recognize the threats that critical events can have on their employees' and citizens' safety and their ability to sustain business operations.
Our Critical Event Management solutions help major public and private organizations around the globe during critical events by identifying threats, providing context to take action, automating standard operating procedures to respond, and facilitating communications and collaboration with employees or citizens to ensure their safety and the continued operations of businesses. In the second quarter, our growth was driven by new customer additions across our entire suite of Critical Event Management applications, expanding relationships with existing customers, and multi-product deals.
Our newest products, such as Safety Connection, Community Engagement, and IT Alerting, continue to be a meaningful driver of growth, representing 36% of all new and growth sales on a trailing 12-month basis, as new and enhanced solutions beyond our core Mass Notification applications create both additional entry points for new customers and cross-selling opportunities for existing customers. By the way, this figure of 36% new and growth sales does not include revenue from our IDV or Crisis Commander acquisitions, which further contributed to our overall growth in the quarter.
And although we are still in the early process of integrating IDV's Visual Command Center, or VCC as I often refer to it, into our overall Critical Event Management platform, we did close several new VCC contracts including some with existing Everbridge customers, who continue to provide strong support for our vision. Now, allow me to turn to a few more of our key operational highlights from the second quarter.
In the quarter, we added 123 net new customers, which is up from 113 net adds in the first quarter, and brings our total customer count to 3,441, an increase of 15% from a year ago. Our growth is also being driven by our increasing average revenue per customer or ASP, with multi-product deals becoming a meaningful additional dimension of our growth story.
In Q2, we closed 60 multi-product deals compared with 54 last quarter and 45 in the second quarter of 2016, a 33% increase year-over-year. In addition to closing an increasing number of multi-product deals, in Q2 those deals also grew substantially in overall ties per transaction.
In the quarter we recorded a dozen transactions valued at over $100,000 in annual contract value, almost all of them multi-product deals. Examples include Booz Allen Hamilton, Comcast, AEG, and Novant Health, just to name a few.
Allow me to provide a little more background on a few of these wins, starting with Booz Allen. This global management consulting organization was looking to integrate their current traveller information with the physical access control system to understand where their over 25,000 consultants were during major events, in order to keep people safe and their operations running.
The deal included four of our products, Mass Notification, Incident Management, Safety Connection, and Community Engagement. Another notable multi-product win for the quarter was AEG.
The Anschutz Entertainment Group is the largest owner of sports teams and related events in North America, and they selected our Mass Notification and Incident Management solutions to provide greater employee connectivity and safety at their over 100 facilities that host thousands of events each year. And maybe one other multi-product win example from our healthcare team would be the large new deal with Novant Health, a leading healthcare provider in the Southeast that selected five of our solutions for Mass Notification and Safety Connection to help fulfil their enterprise communication needs and their newly formed Security Operations Center.
These examples of large multi-product deals are important illustrations of how our strategy of developing a true platform which can support multiple applications addressing customer needs across multiple departments for an entire organization is working. A key component of our strategy involves leveraging the breadth of our platform to address larger customer challenges than our historic core Mass Notification did by itself, and in so doing, engaging more senior-level sponsorship as they recognize the increasing value and benefit we can deliver with Critical Event Management.
Now, turning to our core business, we recorded significant new Mass Notification and Incident Management wins with leading financial institutions such as RBC and Scotia Bank just to our north, as well as government organizations like California Department of Social Services, all three of which were new six-figure deals. The California DSS one is particularly significant in that it illustrates a recent trend where government entities are leveraging Everbridge not just to communicate with their citizens but also to keep their employees safe and their operations running.
Other notable Mass Notification deals included leading brands like [indiscernible] Publishing, companies like Micro Focus and Shutterstock in tech, organizations such as AARP in the not-for-profit space, TripAdvisor and AAA Michigan in travel, and Beaumont Health System in the healthcare and hospital market. Notably, Beaumont was a six-figure transaction where we displaced a legacy provider of communication and collaboration solutions.
Our success with newer solutions like IT Alerting and Safety Connection also continued in the quarter, with our IT Alerting solution being selected at leading organizations like Charter Communications. Charter selected Everbridge in a six-figure enterprise transaction after an extensive evaluation process that focused on solution breadth, scale and delivery assurance as key evaluation criteria.
As a result, Charter will benefit from consolidating multiple vendors across multiple IT groups, with a unified IT response platform, which will enable additional expansion for us in the future. This broad transaction also reflects the expansion of our IT Alerting use case beyond services operations to now include security operations, development operations, and backup and recovery functions.
Other key wins with IT Alerting solution included Medtronic Corporation, a current customer that deployed a new implementation of this product to enhance their management of over more manual IT incident management processes across their entire organization, as well as other IT Alerting wins at organizations like Caesars Entertainment Group, NIIT, a global IT solution company, and Pentagon Federal Credit Union. Sticking with our newer solutions, let me provide some color around our rapidly growing Safety Connection customer base.
In Q2, we saw the number and size of Safety Connection deals continue to grow, both year-over-year and quarter over quarter with new wins with organizations like Altria, formerly Philip Morris, who wanted to provide enhanced safety to their thousands of travelling employees and made the decision to purchase Safety Connection Pro in under 30 days. Another notable Safety Connection win was Dropbox, who heard about Everbridge from other satisfied Bay Area customers, as you know we got quite a few of those guys, and sought a solution that would integrate with our partner International SOS for their fast-growing employee base.
Other representative Safety Connection wins in the quarter include Airbus GlobalSecurity operations, which expanded their Everbridge relationship with a large six-figure deal, as well as Biogen, Ican, and Tosmo Energy who interestingly enough expanded their end-to-end product subscription as well as adding Safety Connection in Q2, an example of how we can expand usage of existing products and simultaneously add entire new products to grow customer relationships. We also saw meaningful new wins for our Community Engagement, Secure Messaging and Crisis Commander solutions at organizations such as the City of Philadelphia, Compassionate Care, and Boston Consulting Group respectively.
The newest product in our portfolio, Visual Command Center, which you may recall was part of our mid first quarter acquisition of IDV, also produced very encouraging results in the past quarter. We just began to upgrade and integrate VCC into the Everbridge CEM suite of products which we previously stated will be delivered by the middle of next year.
Over this past quarter, ahead of expectations we witnessed a very positive market response to VCC, especially in our Everbridge existing customer base, with new VCC wins at one of the world's largest social media companies as well as one of the largest enterprise software companies. The enterprise software win was notable because we had just closed the new six-figure Mass Notification deal with this company in Q1 after a several-month negotiation for a new Master Services Agreement, which we were then able to turn around and leverage for a six-figure VCC win that took only 30 days to negotiate, start to finish.
Not only is the reduction in time to close important, but the total annual spend by this organization on three products, the MN and IC and VCC now approaches $500,000. That's a 4x increase over the size of a typical enterprise deal and over 10x on our historic Everbridge ASP.
Other key wins for IDV in the quarter included multiple six-figure wins at one of the world's largest cloud providers, one of the largest retailers in North America, and one of the largest insurance companies. We remain very excited about the potential for VCC as a strategic differentiator and a critical component of our CEM suite for global enterprises.
In addition to these new wins, we saw our land-and-expand strategy continue to deliver solid results in the quarter, across all focus verticals and geographic markets, including a substantial expansion at leading financial services organization, Thomson Reuters, who was concerned with recent major events in both London and New York and sought to expand their provision of care for employees by rolling out our Safety Connection Pro solution, four different products, increasing their annual spend by over 50%. In the healthcare vertical, existing customers like LA County committed to a six-figure expansion with all of our Everbridge and CareConverge application.
And again, importantly, LA County win reflects the growing clinical use of our product on the operating side of healthcare providers. In the energy space, energy moved from a departmental deployment of Mass Notification to a company-wide rollout that displaced a competitive solution for all business continuity and emergency notification.
From a specific end market perspective, the corporate vertical continues to be our biggest contributor to revenue, followed by government, and then healthcare. Finally, with regard to other geographies, channels, and niche verticals, we saw key new wins and growth transactions in Europe with organizations such as MSC Cruises, where they are deploying MN across a fleet of 12 large cruise ships, and CBRE, the leading commercial property and real estate organization who selected Safety Connection to help them understand where their employees were when a major incident like Westminster Bridge terrorist attack occurred and whom specifically was affected, as well as the continued deployment in one of the world's largest banks where they expanded their use of Mass Notification and our ContactBridge, that's our mobile solution, to their roughly 250,000 employees across the globe.
From a channels program, we continue to build momentum with partners like International SOS where we closed new business with organizations like Schlumberger, the world's largest oilfield services company, who wanted to replace an old mass notification solution with a more tightly integrated communication and traveller solution for their 100,000-plus employees in over 85 countries around the globe, and chose the combined Everbridge and International SOS solution in Q2. And to close out my customer highlights, I'm happy to update you on our continued success in North American transportation, specifically the airport market.
With a recent win at Boston Logan Airport, we can now count all top 25 of the busiest airports in the United States as Everbridge customers. We similarly have a strong position with many of the nation's largest transit systems, airlines, railroads, cruise lines, and port authorities, complemented by our use at 8 of the 10 largest cities in the U.S.
A strong position throughout the public infrastructure space is helping us become the standard for transportation as well as major government sectors. The technology continues to be used to help customers with many of the most disruptive threats that occur around the world.
An example is the London Bridge attack in June. Within minutes of the incident, our enterprise customers went into action using Everbridge to contact employees and ensure they were safe, leading public organizations like the City of London Police or the Cross-sector Safety & Security Communications teams issued alerts to citizens and local emergency services, and hospitals used the system to coordinate response.
From government agency to healthcare organizations to private corporations, Everbridge delivered the communications to provide the critical information necessary to keep people safe. Turning to product and operations, as I indicated in our last quarter's call, we just deployed our newest core communication engine, further increasing our global scale and robustness.
Since launching this new engine, we have reached the significant milestone of sending over 4 billion messages. Now before I close, let me provide you with some additional background on the important new announcement we made earlier this week about the addition of two proven executives to our senior management team.
First, Robert Hughes, who most recently served as President, Worldwide Operations for Akamai Technologies, joined us in a newly created position of President. Many of you may be already familiar with Bob Hughes as a seasoned enterprise technology executive and visionary who spent over 17 years scaling and expanding Akamai's global operation services from under $50 million to over $2 billion.
Bob served on Akamai's executive leadership team for more than a decade, most recently overseeing day-to-day global operations in all aspects of the customer experience, including global sales, services, marketing support, and go-to-market strategy. At Everbridge, Bob will be responsible to Company's go-to-market operations, including sales, marketing, professional services, and the customer success efforts.
I'm really excited to have someone with Bob's proven breadth of experience in establishing strategic direction as well as growth execution reporting to me. The entire team and I are eager to leverage Bob's expertise as we scale Everbridge to the next level of growth and success.
In addition to Bob, we also announced that Javier Colado joined our senior management team as Senior Vice President, International Sales. Most recently, Javier served as President of EMEA operations at Intralinks.
Previously, he had led international growth in EMEA and Asia Pacific in organizations like SAP and McAfee, as well as serving as Head of Global Sales at Novell where he had direct responsibility for over $1 billion in annual revenues. At Everbridge, Javier will be based in our London office to lead all international sales, serve as a member of our senior management team, and will report to Bob Hughes.
The combination of these two executives will significantly deepen our management team as well as help us continue to expand our leadership position in Critical Event Management. In summary, our second quarter performance illustrates our ability to serve the critical event management market with robust and differentiated solutions.
As we look to future quarters, we expect our growth will continue to be driven by our Mass Notification solution, and increasingly by our new applications, including IT Alerting, Safety Connection, Community Engagement, and Visual Command Center, all accelerated by an anticipated growing number of multi-product deals. And over the longer term, we believe increasing demand for our Critical Event Management suite will drive growth and profitability in the years ahead.
Now I would like to turn the call back over to Ken for specific details of our financial performance during the quarter and our continuing outlook for 2017. Ken?
Kenneth Goldman
Thanks Jaime. I'll provide some more details on our financial performance for the second quarter, and then provide you with our outlook for the third quarter and the year.
Revenue in the second quarter was $25 million and was above the high end of our guidance range and represented growth of 35% from a year ago. Our better-than-expected top line performance was the primary contributor to producing adjusted EBITDA that was also exceeding our expectations, coming in at a loss of $100,000 compared to a gain of $100,000 a year ago, including the anticipated negative impact of our IDV acquisition which had impacted our profitability for the quarter.
Our dollar-based net retention rate remains above 110%, reflecting the significant value and satisfaction we provide to our customers. Now I'd like to turn to 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 profit of $18.3 million increased 36% from a year ago and represented a gross margin of 72.5%, compared to 72.7% a year ago but up from 70% in Q1, with the year-over-year decrease mainly due to acquisition accounting. While gross margins can fluctuate from quarter to quarter, we expect that over the long term, we can continue to drive gradual improvements as our business scales.
Total operating expenses were $19.7 million in the quarter, increasing 34% from a year ago, reflecting product and infrastructure investments to support our long-term growth as well as the increased headcount and related expenses associated with our recent acquisitions. As I noted, adjusted EBITDA for the quarter was a loss of $100,000, which compares to positive $100,000 a year ago, with the decrease being primarily due to acquisition accounting.
Net loss in the second quarter was $1.4 million, compared to a net loss of $1.2 million in year ago quarter. Based on 27.8 million basic and diluted weighted average shares outstanding, net loss per share was $0.05 for the second quarter, also better than our guidance.
Turning to our balance sheet, we ended the quarter with $45.3 million in cash, cash equivalents and short-term investments, an increase from $39.7 million at the end of the first quarter, primarily due to the $10.1 million in proceeds from our follow-on offering in April, offset by an operating cash outflow of $3.9 million in capital expenditures and capitalized software development cost of $1.7 million. Total deferred revenue was $59.6 million at the end of the quarter, an increase of 37% from a year ago.
As we have noted on prior calls, our deferred revenue balance at the end of any given quarter can vary due to a number of factors. As such, even though we have predominantly annual payment terms, deferred revenue is not always a meaningful indicator of the underlying momentum of our business from a quarterly perspective and we believe it is directionally relevant over the longer trended period.
Now let me turn to outlook. With better-than-expected second quarter performance and continued business momentum, we are increasing our full year expectations for revenue and profitability.
For the third quarter of 2017, we expect revenue to be between $26.3 million and $26.5 million. We anticipate an adjusted EBITDA loss of between $300,000 and $100,000.
Adjusted EBITDA guidance assumes an estimated stock-based compensation expense of approximately $4 million for the third quarter. We anticipate a non-GAAP net loss of between $1.8 million and $1.6 million, or between negative $0.07 to negative $0.06 per share based on 28 million basic weighted average shares outstanding.
For the full year, we now anticipate revenue to be in a range of $102.3 million to $102.7 million, representing year-over-year growth of 33% to 35%. We're now anticipating an adjusted EBITDA loss of between $1.8 million and $1.3 million for the full-year 2017, which includes positive adjusted EBITDA for our core business, offset by losses from acquisitions earlier this year.
We now expect a non-GAAP net loss of between $8.1 million and $7.6 million for the full year, or between negative $0.29 and negative $0.27 per share based on 27.9 million basic weighted average shares outstanding. In summary, we are pleased with our continued progress during the first half of 2017 and we remain optimistic as we look to the rest of the year.
As we execute against our strategy, we are meeting our growing demand for critical event management technology, while expanding on our leadership position in the marketplace in order to capitalize on the multi-million dollar market opportunity ahead of us. With that, operator, can we now open up the call to questions please?
Operator
[Operator Instructions] Our first question comes from Brad Sills from Bank of America. Your line is now open.
Brad Sills
Congrats on a nice quarter. Just wanted to ask a little bit about the public sector vertical, counties and municipals, how did that track this quarter?
It sounded like a lot of the strength came from corporate healthcare, but any color there would be helpful as well please.
Jaime Ellertson
I don't think, to be honest, the actual percentages changed much. It might have been 1% or 2% but nothing significant.
And the overall government sector is still, it's number two for us as I mentioned in my prepared remarks, and continues to grow on pace with last year. Obviously, larger city, county, state wins will impact that and we've already spoken to that topic in past.
So, I won't comment on it again, unless there's a specific question. But in simple answer, a good solid quarter and believe that we'll continue to do that.
We just can't highlight every name, and increasingly, we will probably eliminate some of the names and try to highlight a fewer in number because we don't want our competitors to use it. But any follow-on questions from that, does that answer your question?
Brad Sills
That's helpful. Thanks Jaime.
Appreciate that. And then it sounds like IT Alerting was an area of strength again this quarter.
Are you seeing it cross-sell into the corporate base? I think you mentioned mostly hospitals there for IT Alerting.
Is there something about the offering that lends itself more to that vertical or are you seeing kind of broader traction there?
Jaime Ellertson
So we brought on, as I mentioned last quarter and we did a press release on it, a new executive to lead our go-to-market. That executive owns the kind of product direction and some of the go-to-market and he will report to Bob Hughes in his new position.
But he has made a big impact with us and helped us dramatically focus the product. I would say that, again, I gave you the big example was Charter Communications and that was a significant win, hundreds and hundreds of thousands of dollars for an organization that was able to combine multiple different departments, an organization that's the former Time Warner combination, with Charter, and it's a big business now.
I think it's a Fortune 100 business. And so that was a big win in corporate.
That was my lead-off example. And then a couple of the other ones may have been healthcare.
But it's probably still dominated by corporate, not healthcare, and healthcare is up-and-coming, and that's important to us because healthcare and corporate are two of our top three markets. But I'd say it continues to be, I don't know, 60-40, 70-30, something in that range for corporate.
We don't give out specific guidance there and we just saw increasing adoption. The product is more mature.
It's now two years old. So, we're really starting to pickup traction with it and we're excited about the future for that product.
Brad Sills
That's great, thanks. And then just one last one on the international, you mentioned some strength there.
Do you feel like you're really hitting your stride there, is there something different about compliance, if you will, in international geographies that perhaps now you are kind of gaining some momentum there? Just a little bit of color on what's driving that.
Thanks again.
Jaime Ellertson
That one is easy, Brad, and everyone probably knows this. We are a business that has an unusual and increasingly frequent driver, which is when bad stuff happens, people pick up the phone and call Everbridge.
And so, as you gentlemen and ladies know, in the past couple of quarters there have been a lot of bad stuff happening. In London alone, and U.K., three major terrorist incidents causing multiple lives to be lost, major weather events, typhoons and earthquakes and hurricanes throughout that part of the world, and people increasingly turn to Everbridge, pick up that phone, because we are the leading brand worldwide and the scaled provider of those services.
So, I know our U.K. team is probably seeing one of the biggest inflows of new opportunities.
Whether that's translating into a difference from our roughly 10% or so international, I don't think so yet, I think that's still yet to come, but that's part of the reason to broaden that team with Javier Colado coming onboard and focus on continued expansion internationally.
Brad Sills
Great. Thanks, Jaime.
Operator
Our next question comes from Tom Roderick with Stifel. Your line is now open.
Tom Roderick
So Jaime, I was going to ask you about just sort of the cross-selling opportunity here and the selling motion that goes into it with relation to VCC product. It seems like you had some nice early traction there selling that sort of back to base and interest from that.
But can you talk about how you are sort of organizing the sales force, what you're doing from a training perspective, and what is left to do in terms of integration between that product and the core?
Jaime Ellertson
So, the strategy is – that is a big part of our strategy of why we think we have a hopefully very predictable and scalable revenue model for future quarters. As we build out the product set and have a very scaled platform – if you remember our initial IPO message was, hey, we've built this platform that could deliver zillions of messages reliably across the globe or transactions to collaborate and communicate, and now we are adding products on that, leveraging those profiles and those engines to deliver or communicate, handle workflows across entire groups like security operations or IT operations.
And so, it does put the pressure on our sales team as we get to be having five, six, seven applications in that Critical Event Management suite. They do have to learn all those.
We're somewhat focused on verbal organization. That's why you have corporate, government and healthcare here.
Those are three of our largest verticals. And as I said in earlier calls, we continue to upgrade our sales team to be prepared to sell instead of a $50,000 or $100,000 enterprise win for Mass Notification – as I mentioned the large enterprise software company, that was somebody who spent $200,000 for Mass Notification and spent over $200,000 for VCC.
So two – I think Incident Management was in there – so three of our products generating $0.5 million, that's exciting to us because it portends that in larger organizations, 4 to 1,000-2,000, leading government sectors, we have the opportunity to sell a very large enterprise solution. And with that will come continued growth in the sales force, knowledge, segmentation.
That's really one of Bob's biggest challenges as he comes onboard. He's going to have to get his arms around that, and we're hoping with his dramatic experience at Akamai, he's probably seen one of the mistakes people make and hopefully we can avoid some of that with his experience, and allow us to mature that team and grow its execution capability in a much larger average deal size.
But that's what the product strategy has been about for two years here, and I think you're seeing with the multi-product deals early indications that if we can sell three or four products and increase the ASP from under $100,000 to $300,000, $400,000, $500,000, then with a coherent integrated Critical Event Management strategy, we should be all over that looking at $500,000 to $1 million, and that's what excites us right now. That's the opportunity in front of us.
It's still not here, because we said we won't integrate that fully until the start, middle of next year with VCC, but the early success we had with customers literally saying, we're buying your standalone Mass Notification and Incident Management product and then we're going to buy VCC on the front-end of that, at least is some substantial votes of confidence that we're headed in the right direction and they are willing to spend for the added value and benefit we can deliver to an organization, both operationally and from a security standpoint.
Tom Roderick
That's really helpful. Thank you.
A quick follow-up for you, Brad just asked a second ago about the public sector, I guess I didn't hear sort of an update, if you wouldn't mind, with respect to the state-wide opportunity in front you. You've talked about it anecdotally in the past.
It sounds like pipelines are building. But understanding that big deals in there are a little bit lumpy, can you just provide some context for us to think about how excited we should still be about that opportunity?
Jaime Ellertson
Yes. So you answered part of the question yourself.
So I'll remind you that you said they can be quite lumpy and we can't always control the timing. What I said in I think our Q1 call was that we had already entered kind of a contract finalization or award process, and a couple of these contracts had gone to public notice and public hearing.
And because we didn't want you to think we didn't know what was going on in our own business, we kind of got in front of that. We continue to be the same, I would prefer to say, mature management team, that won't name names until they are signed, sealed and levered.
So, we have no diminution of or no less number of large city and state deals in the works. That's increased, not decreased.
But until they are 100% finalized and awarded, we won't comment past what we have commented on, which is multiples have gone into the final stage. And as you'll remember, and I hate to call your attention to it, but the State of Florida, we won it and then it took us three, four, five months to get through the appeal process, and no one likes to be a loser, and so there are people that sometimes raise their hands.
But I wouldn't change anything in your analysis, and we're certainly not trying to guide to anything different than what we said. They just tend to be lumpy and time-consuming and we continue to work aggressively on them, coming in this year.
Tom Roderick
Perfect. Great color, thank you guys very much.
Nice job.
Operator
Our next question comes from Michael Nemeroff with Credit Suisse. Your line is now open.
Alexander Hu
This is Alex Hu on for Michael. Thanks for taking our question and congrats on the quarter.
Just one for Jaime, with the increase in multiple-product deals, does that affect the timing of closing them as they get larger? I guess the bottom line is, will you be able to keep the same deal closing cadence as the average deal size grows from selling multiple products?
Thanks.
Jaime Ellertson
So we saw a little bit of conflicting evidence, right. I was quite shocked myself, this enterprise software company, and we don't name all the names and we're going to increasingly – I'm going to try to be a good executive and not name names, so Ken doesn't slap me on every one of these earnings calls, but from a going forward standpoint, we were a little shocked that this enterprise software company, which is horrendous and has a reputation as both a short tank and a tough negotiator in technology, took us, I don't know, multiple months to get an MSA done, and then turned around, because we had the MSA, had the relationship, purchased VCC in under 30 days.
I was kind of shell-shocked. I do believe it's partially indicating the power of they want to go with one throat to choke, and if they are going to be spending in the order of $0.5 million or $1 million, they'd prefer that from one strategic vendor.
That's our belief and our thematic behind critical event management. But I don't want to kid you that a $100,000 deal is probably faster to close than $1 million deal.
So, over time we'll see. That's part of the maturing of the sales team, developing the actual battle cards and play cards for the sales team and maturing the sales team, which will hopefully bring that down and keep it in line.
Today we expect them to be a little longer, but we haven't seen anything extraordinary pop up because we're doing a $300,000 deal where we used to do $100,000 deal. Just haven't seen it.
Alexander Hu
Awesome. Good job, guys.
Thanks for taking our question.
Operator
Our next question comes from Terry Tillman with SunTrust. Your line is now open.
Terry Tillman
But speaking of Incident Management, Ken, can you quit slapping Jaime?
Kenneth Goldman
Don't worry, we send out an alert every time that happens.
Terry Tillman
Okay, all right. Sorry, just had to get that one out.
So the first question, Ken, just relates to accounts receivable. It did look like it was a meaningful impact to cash flow in the quarter.
Is that just the nature of the beast signing business late in the quarter or anything around aging in the receivables? I'm just kind of curious, should we see kind of a stronger ramp in cash flow in the second half?
Kenneth Goldman
Yes, it all comes down to timing. We've talked about this with each quarterly earnings call that as much as we try to get deals done every business day ratably throughout the quarter, sometimes they will bunch up.
Buyers have historically been trained to buy towards the end of a quarter. And we've also talked about the fact that sometimes existing customers on renewals will say, okay, it's let's assume a July 1 renewal, but would you mind billing me June 30th because I have budget left, or maybe a June 30th deal and they'll say, please don't bill me until July 1 because I need to get it in the next budget cycle.
So, the one thing I can tell you consistently is that it will be inconsistent and you can't read anything into it.
Terry Tillman
Okay, fair enough. And I guess, Jaime, kind of a bigger picture question in terms of you guys helping articulate kind of this new market around critical event management, have you been able to discern any kind of C-level attention you're getting in some of these opportunities?
And I guess what I'm curious about is, do you think it hurts or helps not having really any good comps or proxies or peers out there kind of pitching the same idea of critical event management?
Jaime Ellertson
It is a fair question, Terry. I think, look, one thing that we're seeing, and it gets back to the previous question about closing large opportunities, is I'm increasingly hearing at this – I heard about one being worked at one of the largest companies in the world, and they said, it's going all the way up to the President to sign.
I don't like that in terms of deal timing, I love it in terms of the CEO or the President knows who Everbridge is, and it's that critical platform for them. That's what we want, right.
So we just have to balance those two things. And then – what was the second half of your question?
Terry Tillman
Just in terms of, you are articulating this strategy or this message of critical event management. It does seem like it's kind of a newer category you're trying to kind of build out here.
And I'm just curious, sometimes if some of these bigger enterprise software companies get into a market, that helps validate it and just creates a bigger noise factor, but you are not having a lot of good comps that are saying the same thing. I'm just curious if that actually makes it a little bit more challenging because then you have to be the evangelist.
Jaime Ellertson
Not really, because I think if you look at the combination of not just the contextual understanding in predictive analytics, in risk assessment and analysis, the communication space, the incident management space, the location aware and mobile space, all those markets are what we're combining to be the operational dashboard and the operational playing field for major corporations. And it's clear with the number of incidents that every corporation has to deal with this.
Anyone with thousands of employees, and there are thousands of those companies across the globe, need one of these platforms. And so, what we're doing is aggregating that entire space, and the only guys that claim to do it on a single unified platform with scale, reliability and global reach.
And because of that, I don't think we look at it as no other players. We have thousands of competitors.
They are just individual line competitors. We just happen to be the first SAP of critical event management, and in that sense, we have to lead the charge.
But most of these organizations have these component pieces. They just haven't stitched them together in a coherent platform.
And therefore, when an emergency happens, they got to go to six different systems to see the data, to understand the impact, to communicate, collaborate, keep people safe, basically their operations running. And because of that, I think we're in a great position, and I'd rather lead that market with really no clear competitor, except for small multiples in the individual component markets.
It's a much easier space to grow the business we hope for the next two, three years.
Terry Tillman
Got it. Great job on the quarter.
Thanks.
Operator
I'm showing our next question comes from Brian Peterson with Raymond James. Your line is now open.
Kevin
This is actually Kevin on for Brian. Could you walk us through the balance of your long-term growth drivers in terms of new customer adds versus revenue per customer, and how should we think about that mix maybe over the balance of 2017 but maybe even longer-term?
Jaime Ellertson
We don't try to other than the fact that when we went public, we gave out some rough numbers in terms of the base and new. The leading indicator that you're getting from us is the new products, obviously two, three years ago before we had any other products outside of Mass Notification and Incident Management, you only had those two and they represented 100% of the revenue.
Since that point, we have introduced now five new products, including now the VCC product. And we said that in this quarter, not including Crisis Commander or VCC, they accounted for 36% of all new and growth sales to existing or new customers.
So those new products are growing very quickly. What's the upside on that?
We don't know. At some point we'll reach an equilibrium or we'll have a huge organization sign up and that will make Mass Notification harder to offset by that number, but it's been growing consistently every quarter since we went public, four straight quarters.
Other than that, our base, we continue to renew with best-in-class metrics and it's a very large base. Whatever revenue it was this year, you pull it forward and subtract whatever it is 4% or 5%, and you are rolling forward.
So, we don't give other metrics on that. Ken, any comment?
So that's how you'd have to model it. You certainly want to look at a lot of our growth both from existing customers, which is a subset driver, and net new seats.
And that's recording anywhere, we keep saying, between 100 and 125 new customers a quarter. That's a significant driver to future growth, and if we can grow the size of those deals, we can grow our business fairly rapidly even without growing the number of deals.
In other words, if I do 125 deals at $100,000, it's a lot less than doing 125 deals at $300,000. And so, we're trying to do both of those.
We're trying to consistently grow by adding 120, 125, 150 new customers, grow the size of the average transaction, and then grow the cross-selling to the base. But we don't break those down other than the 36% contributed by new and growth, because it becomes lumpy and then people micromanage it quarter to quarter, to be honest.
Kevin
Got it. And then could you talk a little about your acquisition pipeline right now and do you see any potential adjacencies that might be a good fit with your current product portfolio longer-term?
Thanks.
Jaime Ellertson
Sure. When you say acquisition, I think you're saying not customer acquisition but M&A transactions.
And we said that we finished Crisis Commander and IDV off really right at the start of the year and in the middle of the first quarter I think when we finally closed up the IDV stuff, that was end of January or start or middle of February. So, we've only had that completed for a quarter and a half.
And to be honest with you, I'm going to tranche out that maturity tab again and just tell you that we think we need to make sure that's running smoothly. We saw very good results for both of those product groups this past quarter, but we'd like to get another quarter under our belt making sure we have operating rhythm, we have the future plans for the product integration on track, and all those are kind of thumbs-up.
And then we will turn our attention to the components within our suite, our Critical Event Management suite, which we have said historically, and I continue to reiterate, we've build out, things like more Incident Management or workflow capability, we said on a roadshow, and more analytics and predictive analytics on the back-end. And those are two areas we continue to look at, everything from AI to predictive analytics and workflow and Incident Management.
And as we have time later this year, we may turn our attention to small product tuck-ins. We haven't mentioned anything other than that with our M&A strategy, and we have really at this time not in a negative sense but no other comment on it, because we're just trying to make sure we're delivering the goods for our shareholders.
Operator
[Operator Instructions] I'm showing no further questions in queue. I would now like to turn the call back over to Chairman and CEO, Jaime Ellertson.
Jaime Ellertson
Thank you, operator. Okay, so we appreciate you joining us, as I mentioned, fourth – it's our Q2, but our fourth call since becoming a public company, and we look forward to seeing you all at investor conferences and out in the field.
Thank you very much.
Operator
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program.
You may all disconnect. Everyone have a great day.