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Is it Worthy to Invest in Everbridge (EVBG)?

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Alta Fox Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. In Q2 2022, the Alta Fox Opportunities Fund (“the Fund”) produced a gross return of -8.46% and a net return of -8.66%. The Fund’s average net exposure during the quarter was 73%. Since its inception in April 2018, the Fund has produced a gross return of 505.72% and a net return of 330.36% compared to the S&P 500’s return of 54.52% and the Russell 2000’s return of 17.91%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Alta Fox Opportunities Fund mentioned Everbridge, Inc. (NASDAQ:EVBG) and explained its insights for the company. Founded in 2002, Everbridge, Inc. (NASDAQ:EVBG) is a Burlington, Massachusetts-based enterprise software company with a $994.0 million market capitalization. Everbridge, Inc. (NASDAQ:EVBG) delivered a -62.66% return since the beginning of the year, while its 12-month returns are down by -82.20%. The stock closed at $25.14 per share on July 29, 2022.

Here is what Alta Fox Opportunities Fund has to say about Everbridge, Inc. (NASDAQ:EVBG) in its Q2 2022 investor letter:

"Everbridge is an enterprise SaaS business that provides mass notification and critical event management (CEM) software in a world with increasing risks (natural disasters/weather, civil unrest, pandemic, active shooters, etc). The software allows large corporates to better manage employees and assets during times of disruption. Everbridge serves 47 of the Fortune 50, has 110%+ net revenue retention, gross margins approaching 80%, and EBITDA margins that are beginning to meaningfully inflect higher. This is a great business.

However, the stock has always been far too expensive for us to underwrite to acceptable IRR thresholds within a reasonable valuation framework. As recently as late last year, investors were willing to pay ~14x forward revenue for Everbridge as the stock price topped out at ~$160/share. The sudden departure of the company’s CEO in December 2021 as well as forward guidance below the Street’s lofty expectations, prompted a precipitous fall in EVBG’s share price. In December, when Everbridge’s former CEO left to take the CEO role at a large PE-backed cloud business, he likely knew that EVBG trading at 14x revenue with slowing growth meant limited upside ahead (and limited personal wealth creation)..." (Click here to see the full text)

Software
Software

Our calculations show that Everbridge, Inc. (NASDAQ:EVBG) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Everbridge, Inc. (NASDAQ:EVBG) was in 33 hedge fund portfolios at the end of the second quarter of 2022, compared to 33 funds in the previous quarter. Everbridge, Inc. (NASDAQ:EVBG) delivered a -41.67% return in the past 3 months.

In June 2022, we also shared another hedge fund’s views on Everbridge, Inc. (NASDAQ:EVBG) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.