What happened
The market is experiencing a major loss of confidence in software maker Everbridge (EVBG +0.00%), the self-proclaimed "global leader in critical event management." As of 11:40 a.m. ET Friday, the stock had plunged by 45.8%.
Already, no fewer than eight separate analysts have pulled support for the stock, downgrading the shares mostly to neutral, market perform, and similar flavors of hold. One analyst bit the bullet and went all the way to underperform on Everbridge: Bank of America's Brad Sills.
Image source: Getty Images.
So what
What prompted this epidemic of loathing? On Thursday night, Everbridge abruptly announced that CEO David Meredith had told the board of directors that he intended to resign, and the board had accepted his resignation. No further explanation for Meredith's departure was given.
Management attempted to allay investor concerns -- unsuccessfully, as is now apparent -- by assuring them that Chief Financial Officer Patrick Brickley and Chief Revenue Officer Vernon Irvin were stepping up to serve as interim co-CEOs while the company seeks a new top officer, and noting that Everbridge remains on track to grow revenues by 20% to 23% this year. Management added that "Mr. Meredith's resignation is not related to any matter regarding the Company's financial condition, reported financial results, internal controls or disclosure controls and procedures."
All for naught. The stock still cratered.
Now what
Analysts point out that while Everbridge may be reaffirming its revenue guidance, the 20% to 23% growth range it's standing by is below Wall Street's estimates, according to TheFly.com.
Stifel in particular (one of the downgraders) noted that Everbridge grew mightily during the pandemic in 2021, with revenues up 36% year over year -- so a deceleration to 23% growth, let alone 21%, would be a big comedown. Bank of America's Sills (the sole analyst to downgrade all the way to sell) noted that although Wall Street had been expecting a deceleration from Everbridge, it still was expecting to see at least 26% growth.
That's not going to happen now, and with the CEO jumping ship, it's no wonder some investors are following suit.
