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Everbridge, Inc. (EVBG) Q4 2018 Earnings Conference Call Transcript

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Everbridge, Inc. (NASDAQ: EVBG)
Q4 2018 Earnings Conference Call
Feb. 19, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day ladies and gentlemen, and welcome to Everbridge's Fourth Quarter 2018 Earnings Conference Call. At this time, all lines are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. (Operator Instructions). And as a reminder, today's conference call is being recorded.

I'd now like to hand the conference over to Everbridge's CFO, Ken Goldman. Please go ahead, sir.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Good afternoon and welcome to Everbridge's earnings conference call for the fourth quarter of 2018. This is Ken Goldman, Senior Vice President, Chief Financial Officer of Everbridge. With me on the call today are Jaime Ellertson, CEO and Chairman; Patrick Brickley, Vice President of Finance and Accounting, and CFO elect. After the market close today, we issued a press release with details regarding our fourth quarter results, which can be accessed on the Investor Relations section of our website at ir.everbridge.com. This call is being recorded, and a replay will be available on our IR website 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 refer 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 this additional detail in the future.

With that, let me turn the call over to Jaime Ellertson, who is joining us from our European headquarters in London for his prepared remarks.

Jaime Ellertson -- Chairman and Chief Executive Officer

Thanks Ken. Welcome to those of you joining our fourth quarter earnings conference call. Our strong fourth quarter results capped a very successful year for Everbridge. With continued momentum across our entire platform and particular strength demonstrated in our Critical Event Management or CEM success.

At $41.8 million, revenue in the fourth quarter was above the top end of our original guidance and at the high end of our preliminary results that we announced in January, in conjunction with our successful follow-on equity offering and represented a year-over-year growth of 43%. And adjusted EBITDA in the quarter exceeded both our original and preliminary expectations, coming in at $0.8 million.

For the full year, we generated revenue of $147.1 million, up 41% over 2017 and we delivered this accelerating growth while still beating our adjusted EBITDA guidance. Our strong financial results for the quarter and for all of 2018, reflect the successful execution of our three-pronged long-term growth strategy. Specifically, first, to maintain solid growth rates and global expansion of our Mass Notification and Population Alerting businesses. Secondly, to achieve best-in-class renewal rates, while driving more multi-product sales into our customer base, as well as the addition of net new customers to grow our customer base overall. And thirdly, to expand the adoption of our strategic Critical Event Management suite.

During the fourth quarter, we blew it out on every metric we track. We added record 155 net new enterprise customers, bringing our total enterprise customer count to 4,422. This quarterly increase is well above our historical range of roughly 100 to 125 net new customer additions. And in Q4, we continue to drive overall dollar based retention consistent with past quarters in the mid-90% range and net retention of over 110%.

During the quarter, Everbridge saw a strong contribution of new deal activity coming from new products, such as IT Alerting, Safety Connection and our Visual Command Center solutions. These new products contributed a record 55% to all new and growth sales made in the quarter.

Our core Mass Notification products also delivered substantial growth, driving 45% of all new and growth sales, with particular strength in the international markets during the fourth quarter. And these products were often purchased in multi-product deals. Q4, we drove 93 multi-product deals, up 33% from a year ago. These strong product sales results drove the overall value we see in each transaction, as reflected in the growth in our average deal size or ASP increasing to over $67,000 on a trailing 12-month basis, up 31% year-over-year.

In fact, the fourth quarter Everbridge -- in the fourth quarter, Everbridge closed 32 deals valued at over $100,000 per year, a new record and more than a 100% growth in the number of deals we closed of that magnitude just one year ago. We also saw substantial demand for our most strategic suite, with a record number of 11 Critical Event Management deals from new and existing customers adopting our multi-product platform or adding products to expand into our CEM suite. This brings the number of CEM customers at the end of Q4 to 35, up 45% from just a quarter ago.

And international revenue continued to grow rapidly as well, increasing over 175% from a year ago, another record and total international represented 20% of our overall revenue. As we often state our individual quarterly metrics, even record results can fluctuate and should not necessarily be considered indicative of any trends. We still believe the best way to evaluate our performance is to look at our trailing four quarter average as the overall measure of our consistent growth.

Last, our revenue mix for Q4 was 56% corporate, 31% for local, and state and federal government deals, and 13% for healthcare. All roughly consistent with previous quarters, as we continue to see growth from across all our vertical markets.

Looking at the year as a whole and our rolling four quarter metrics for 2018, we saw total revenue growth of 41%, up 36% last year and 31% growth from the year before that, demonstrating our continued steady expansion fueled by new products into our large total addressable market. A 36% increase in new and growth sales, almost 1,000 net new customer additions, with roughly half of those coming from UMS, continued high customer satisfaction, with mid-90% net retention, closing 104 deals valued at over $100,000 each, that number is up 70% over 2017. Continuous ASP growth of 31% to over 67,000 and strong success with our strategic CEM suite contributed to our ASP growth, with 25 CEM deals in 2018, up 150% from the 10 deals closed in 2017.

Equally, the size of the CEM deals continues to be between 5 times and 15 times the size of our overall ASPs. Accelerating international revenue growth of 168%, now representing 90% of all revenue for the full year, compared to 10% of revenue in 2017. And of course, our entry into the federal government and defense markets, we substantially increased our addressable market opportunity and demonstrated its value in 2018, signing our second largest customer contract to date, a multi-million dollar multi-year deal with the US Army.

Now turning to some of the specific fourth quarter highlights. All three of our strategic growth drivers produced strong results in the quarter, starting with our first growth driver, Mass Notification and Population Alerting. Allow me to begin by updating and expanding our actual definition of this growth driver to include both historical core Mass Notification, instant communication and secure messaging solutions, as we've done in the past, but now adding our population location-based alerting solutions, which we acquired last year from UMS. These newly acquired Population Alerting applications are in the process of being integrated with our best-in-class Mass Notification solutions, and therefore won't be included in this first growth strategy. As you know, our Mass solutions are sold in both the private and public markets across all geographies, as our Population Alerting solutions with one exception. Our acquired Population Alerting solutions, we call them (inaudible) and LBAS are not sold into the North American market.

Going forward, we'll combine all four of these solutions under the single umbrella of Population Alerting, representing our first growth driver for both public and private marketplaces.

In the fourth quarter, we signed core Mass Notification deals with new customers across all our target markets, including high profile companies such as RingCentral a global leader in cloud based business phone systems, and with one of the top luxury department store chains in North America, with over 70,000 employees and 380 stores, as well as signing large expansion deals such as HSBC Global Services with over 250,000 employees in over 60,000 countries.

We also signed numerous large six-figure public market Mass Notification deals, including Harris County, Texas, the third largest county in the United States. New York City Housing Authority, which provides affordable housing for more than the 400,000 people in 328 public housing developments across the city's five boroughs, where we leveraged our existing relationships with the City of New York and the State of New York, our Everbridge network effect, as well as Mass Notification deals with one of the larger Canadian regional government entities, the Halifax, Nova Scotia Regional Municipality. And closer to home, in the newly entered US federal government space, we've recorded new entire agency wins such as the Government Publishing Office, a competitive takeaway, as well as growth deals at agencies like the Federal Deposit Insurance Corporation.

In the healthcare market, we saw significant secured messaging wins at leading organizations, including Steward Healthcare System, the largest private, for-profit hospital operator in the US, operating 38 hospitals nationwide. And Prism Health, the largest not-for-profit health organization in South Carolina.

Internationally in Asia, we secured our second seven-figure state deal in India, this time in the state of Odisha, with a population of more than 45 million people. The Government of Odisha will be leveraging the Everbridge platform to create and operationalize disaster response plans, mobilize resources, and track activities across multiple state departments. Odisha is one of the many large coastal states in India, which gets hit by heavy cyclones and floods each year. India continues to represent an important growth market for our business in Asia.

Across the world in Europe we signed another large six-figure Mass Notification win, with the Government of the Netherlands. This deal is significant, because as you may recall, we already have a general population alerting contract through our UMS business for the entire country. But this win was a product that was procured by our new local team supporting one of the Netherlands largest government entities, and this one deal is roughly equal to our entire revenue from this country last year.

This result demonstrates that our acquired and local teams are working well together, and delivering results that should sustain our continued expansion and international success in 2019. Further, these wins across the broader international market indicate, we are well positioned to continue penetrating this large market opportunity. Across the broader Europe, recent events such as the new EECC directive that requires member states to setup public emergency alerting systems to protect residents and visitors should dramatically increase the number of large multi-million dollar opportunities we can target over the next three years. All helping us sustain continued long-term growth of our population alerting solutions globally.

Our second growth driver begins with our continued mid-90% dollar-based customer retention renewals from our large base of over 4,400 enterprise customers, and that accelerates our overall success by layering on growth in net new deals. Growth deals include a supplemental product being sold into an existing customer or expansion of an existing solution and these growth and net new customers are typically purchasing, one of our newer solutions like IT Alerting, Safety Connection or Visual Command Center.

In Q4 we continued to deliver substantive evidence of our enterprise leadership in the IT Alerting space, receiving recognition from both industry and customers, based on peer reviews from the User Community IT Central Station recently named Everbridge, the leading enterprise IT and Incident Management tool in the market. This leadership is also reflected by our customers, who drove our IT Alerting revenue up 40% year-over-year. In the fourth quarter, marquee key brands, including leading financial institutions like Fifth Third. The world's largest low cost airline, Southwest Airlines, and one of the nation's largest emergency 911 solution providers, West Corporation. As well as internationally and six-figure deals with growth customers such as Standard Chartered Bank, is undergoing a major automation initiative, where we demonstrated that we can mobilize their global IT staff eight times faster than their previous system, all signed large enterprise IT Alerting deals.

We had similar success with our Safety Connection solution, recording numerous six-figure wins at new brand name customers like Fortune 500 engine-maker, Cummins. The fifth largest defense contractor, General Dynamics. And leading high growth technology companies like Workday. And outside the US, we signed Safety Connection deals with important new customers like the Parliament of Singapore, which represented a key government agency win in Singapore, reflects our growing traction in the Asia-Pacific region. As a result with deals like this and our momentum throughout the year, revenue for Safety Connection in Q4 grew by 90% year-over-year, and 76% over the full year.

We also saw great success with our multi-product six-figure deals in the quarter, including wins like cryptocurrency dealer Coinbase, who selected both our Visual Command Center and our Safety Connection solutions., as one example of new multiproduct customers. Or our growth win at Sutter Health who continues facing increasing threats from wildfires and added our VCC to their existing environment of Mass Notification, Instant Communication and CMS emergency preparedness solutions.

The third component of our growth strategy is CEM, which continues to drive our largest and most strategic new and growth deal activity at Everbridge. In Q4, we closed a record 11 CEM deals, including the significant Fortune 1000 organizations, like the second largest chemical company in the world, Dow Chemical, who will be leveraging our entire CEM suite to build a state-of-the-art fusion center, that bridges their physical security and cyber security environments into a single unified and integrated view for managing and responding to enterprise risk. We're excited to lead this effort at Dow, which is representative of how enterprises are helping to ensure the protection of their people, assets from both physical to cyber assets, and reputation on a global scale.

In Q4, we also closed six-figure CEM deals with one of the largest overnight delivery companies in the world, with over 450,000 global employees delivering 15 million shipments is stay across 220 countries as well the largest independent petroleum refiner in the world Valero another Fortune 1,000 company with over 10,000 employees, operating 15 refineries as well as the largest ticket agency and promoter of global events, just to name a few, across these four examples of our numerous CEM wins in Q4, you see the consistent thematic that each enterprise has hundreds of thousands of employees often spread across numerous locations supporting business operations with the global brand and faces the potential of multiple critical events on any given day.

From cyber issues to core business functions to travel disruption. All of these companies need to know who is where and what assets are affected when a critical event occurs, whether natural disaster or a man-made event. That is where we see a value proposition and as Q4 evidenced, large organizations are increasingly adopting our suite to keep their people safe and their businesses running faster.

Each of these new and growth CEM deals was between 5 and 15 times larger than our overall ASP and continue to be substantive drivers of our overall growing revenue. And as a significant incremental step toward CEM adoption, we saw a number of new and existing customers choosing to adopt Visual Command Center. We will remind you that we define our CEM suite customers as purchasing a mineral three of our core four CEM products; Risk Intelligence-as-a-service or RIAAS. MNRIC our Mass Notification Incident Communication Products, Safety Connection and Visual Command Center. New customers who chose VCC in the fourth quarter, include leading organizations like Olympus Corporation of the Americas, (inaudible) money services as well as leading online payment provider, Stripe.

Needless to say we're stoked about our future. Given we believe we're just at the beginning of penetrating this very large CEM market opportunity, as well as a huge opportunity for our Population Alerting solutions. For example in 2018, we were able to grow our CEM sales by over 50%, even while we limited our focus to just the corporate sales team in North America. So you can imagine how excited we are to be expanding our markets and geographic reach for CEM in 2019.

Internationally, we saw rapidly increasing success with our recently acquired Population Alerting solutions, solid progress in new geographies like Southeast Asia and India, combined at year-end with fundamental new government regulations, that should dramatically accelerate regionwide adoption and the sheer number of multi-million dollar opportunities in a market, which grew by 150% in 2018.

We believe our track record of winning larger deals and growing ASPs, as well as the fundamental early stage of both these key markets will further support our growth well into the future. And our success continues to be recognized by the industry. In addition to the recognition from IT Central Station for our IT Alerting Solution in the fourth quarter, the Everbridge platform was also recognized in a Forrester Research study, focused on solutions that provide a unified approach to ensuring operational resilience, as well as by Frost & Sullivan, who presented Everbridge with the Technology Leadership Award for offering the most comprehensive situational awareness solution on the market.

We're also excited that our ability to protect people and assets, extends to major events worldwide, including our recent use at the Macy's Thanksgiving Day Parade. New York City's New Years Eve celebrations, and although just after the close of Q4, the big game, speaking of Super Bowl 53, we're excited to see the New England Patriots win, as well as Everbridge's rule with the City of Atlanta in alerting residents and more than 1 million visitors and fans participating in a series of events in the 10 days leading up to and including the big game.

Overall, 2018 was a very strong year for Everbridge and a significant proof point that we can indeed continue to expand our market, while in parallel, grow our business faster. As we begin 2019, we believe we are better positioned than ever before to expand our leadership position in both CEM, Enterprise IT Alerting and Population Alerting markets. Of course, as we expand our business, we must also expand our team and the leadership to drive our dynamic organization.

As announced last year, I'll be transitioning to the new role of Executive Chairman during 2019, after identifying and announcing a new CEO. Our CEO search is progressing nicely. We have several strong internal and external candidates deep in the process. I'm confident we will announce the transition of a new CEO over the next few quarters. Furthermore, we recognize that the CEO transition must be accomplished, while we also continue to deliver our historically strong quarterly execution; and because of not exiting the business, and we remain to assist the new leader, I'm confident we will achieve these twin goals of adding to the leadership, while delivering on our commitments to drive long-term shareholder value.

Our growing number of talented employees are a critical element of our success, and our leadership team is also supported by a diverse and experienced Board of Directors. In 2018, we expanded our Board to include Alison Dean, the Chief Financial Officer of iRobot. And just last month, we announced the addition of new board member Sharon Rowlands, who is the former CEO, President of Thomson Financial, former Divisional President of Gannett, and is new -- the newly appointed CEO of web.com Group. Both Sharon and Alison expand the operational experience and diversity of our Board, with executives that have led billion dollar corporations.

While I am on the topic of leadership, I'd like to update everyone on one other senior leadership transition that is ahead of schedule, and all but complete. Our CFO transition from Ken Goldman, who we announced will be retiring next quarter over to Patrick Brickley, our current VP of Finance and Accounting, and incoming CFO. Patrick has already stepped into many of the CFO responsibilities with Ken's assistance, and our team has continued its strong execution without missing a beat. I want to take a moment to express my deep gratitude as a shareholder, and a management team member, for Ken's impressive tenure here and the success we've had with him at the financial helm. I also want to share with you my confidence in Patrick, as he takes over as our new CFO. Patrick has been Ken's number two since joining Everbridge almost four years ago, and he will be just as instrumental in supporting our growth as we look ahead. Both these guys will provide you more detail on the transition during their prepared remarks.

And Patrick will inherit a very strong balance sheet. This past month, we successfully executed a follow-on equity transaction adding roughly $140 million in cash to our balance sheet. While our growth strategy is primarily organically driven, we expect to continue to leverage on our strategic M&A transactions in order to enhance our growth drivers to accelerate our product delivery market expansion. Last year, our M&A activity added 5 to 7 percentage points for a total growth of 41%.

As we look ahead, we will continue to expand our portfolio through organic development efforts, such as the forthcoming delivering of our new crisis Management and analytic solutions in Q1 and Q3 respectively, while in parallel, continuing to evaluate make versus buy decisions that can accelerate our new product introduction cadence. Or expand our geographic reach with acquisitions that we believe will continue to add to our overall growth.

Therefore in summary, from an organizational as well as a product and market perspective, we believe we're in an enviable position as 2019 gets under way. Further market penetration, with more than 40% overall growth in 2018, clearly illustrates that our strategy is working. As Patrick will discuss in a moment, we're confident that we can continue to deliver mid-30s to 40% overall growth in 2019, as our revenue continues to increase to new levels with our CEM Population Alerting solutions further penetrating our multi-billion dollar market opportunity.

Now I'll turn the call over to Ken and Patrick for details on our financial performance and increased guidance for the year.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Thanks Jaime. Before I get into the details of the quarter. I wanted to convey that my years at Everbridge have been the most gratifying in my career. With a high caliber team that I'm surrounded with on a daily basis has been a big part of that. Having worked very closely with Patrick over the past four years, one of the biggest factors in the timing of my retirement is my confidence that I have in Patrick's ability to lead our finance team, as Everbridge advances to its next levels of growth and scale. I'm sure that those of you who have had the opportunity to speak with Patrick will surely agree.

Now let me turn to the details of our financial performance for the fourth quarter of 2018, before passing the call over to Patrick to discuss our outlook for the first quarter and full year 2019. Revenue in the fourth quarter increased 43% from a year ago to $41.8 million, which was above our original guidance range and at the top end of the preliminary results we disclosed in January. We continue to execute well in the quarter, enabling us to deliver adjusted EBITDA of $800,000, which exceeded our original guidance for the quarter, and was also slightly above our preliminary expectations.

Our dollar based net retention rate remains above 110%, reflecting significant value and satisfaction we provide to our customers. Total enterprise customer count from customers generating fees of $200 per month or more increased by a net of 155, the highest number of organic net adds since our IPO. We ended the year with a total of 4,422 enterprise customers.

Turning 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. Non-GAAP gross margin was 70%, compared to 73% a year ago, primarily due to the purchase accounting impact on acquired deferred revenue from recent acquisitions. However, as always, please keep in mind that gross margins can fluctuate from quarter-to-quarter, and should not be considered indicative of any trends.

Total operating expenses in the quarter were $30.6 million, an increase of 45% from a year ago, reflecting the combination of continued product and headcount investments, in addition to the incremental expenses of acquired businesses. As I mentioned, adjusted EBITDA was $800,000 and above our expected range.

Net loss in the fourth quarter was $2.8 million or $0.09 per basic share, and was also better than our original guidance compared to a loss of $500,000 or $0.02 per year, in the year-ago quarter. On a GAAP basis, our net loss was $9.8 million and was also better than our original guidance range.

Looking at the year as a whole, revenue of $147.1 million increased 41% from 2017 with larger deal sizes, higher ASPs and more multi-product sales contributing to this growth. Gross margin for the year was 71% compared to 72% in 2017, primarily due to acquisitions. Adjusted EBITDA for the year was a loss of $2.7 million, and slightly exceeded our guidance and preliminary expectations. It's important to note, that if not for the acquisitions during the year, we would have delivered positive adjusted EBITDA for the whole year, consistent with our strategy.

Turning to our balance sheet, we ended the quarter with $105.5 million in cash and cash equivalents in short-term investments, compared to $103.1 million at the end of the third quarter, primarily due to cash flow from operations of $4.1 million, partially offset by CapEx and capitalized software development costs of $2.6 million. Note that our cash balance at the end of the fourth quarter does not include the net proceeds of approximately $140 million from our subsequent equity offering completed in January.

Total deferred revenue was $95.6 million at the end of the quarter, an increase of 31% from a year ago. As we've noted on prior calls, our deferred revenue balance at the any -- of any given quarter can vary due to a number of factors, including seasonality in which the first quarter represents our smallest quarter for renewals, and the fourth quarter being the largest. As such, even though we have predominantly annual payment terms, deferred revenue is not always a meaningful indicator of the underlying momentum in our business from a quarterly perspective, though, we believe it's directionally relevant on a longer trended basis.

Now let me turn the call over to Patrick for details of our capital raise and our outlook for 2019.

Patrick Brickley -- Vice President of Finance and Accounting

Thanks Ken. I'm looking forward to stepping up as CFO and meeting many of you at investor events in the months ahead. As Jaime and Ken mentioned, in January, we completed a follow-on equity offering, raising $139 million in net proceeds while incurring minimal dilution, and bringing our total balance of cash and cash equivalents to nearly $240 million as of the middle of January. We have been careful with respect to share dilution since our IPO, which was relatively small and was followed by a small secondary offering and a convertible notes offering and now most recently, this follow-on offering in January.

This offering increases our market float and also strengthens our balance sheet, providing us with capital to pursue strategic acquisitions that can complement our organic growth strategy by accelerating the broadening of our suite, creating new and larger cross-selling opportunities for expanding our geographic reach.

Throughout our history, we have been thoughtful in our acquisition strategy and in deploying capital to further extend our market leadership, and this will continue to be the case going forward.

Now let me turn to our outlook for 2019 and the first quarter. With a leading market position, strong product lineup and expanding sales reach, we are optimistic that we will be able to extend our record of mid 30% organic revenue growth into 2019. We expect to achieve this, while also generating positive adjusted EBITDA and free cash flow for the year from our existing business, as we continue our strategy of balancing growth and profitability.

Therefore, for the full year 2019, we anticipate revenue of $195.1 million to $196.6 million, representing growth of 33% to 34%. From a profitability perspective, we anticipate adjusted EBITDA to be in the range of positive $4 million to $5 million. We expect a non-GAAP net loss of between $9.6 million and $8.6 million for the full year or between negative $0.29 and negative $0.26 per share, based on 32.8 million basic weighted average shares outstanding, including the 2.6 million shares issued in conjunction with our offering in January. This guidance assumes estimated stock-based compensation expenses of approximately $39.6 million for the year.

Before turning to our first quarter guidance, let me share so thoughts on factors that will impact our revenue linearity in 2019. First, just after the end of the first quarter, we will see the anniversary of our UMS acquisition, such that effectively all of Q2 will represent organic growth. However, we expect this impact in Q2 will be offset by perpetual license revenue in the low seven figures from deals that closed in the fourth quarter, but will be recognized in the second quarter, including the large Odisha deal that Jaime mentioned. As a result, we expect that our revenue growth rates in each of the first and second quarters will exceed our growth rates in both the third and fourth quarters. We expect the impact for the sale of perpetual licenses from acquired technology to diminish, as we transition these products to subscriptions.

From a profitability perspective, I'd like to emphasize that we expect to deliver positive adjusted EBITDA and free cash flow on a full year basis. But would also like to remind you that our expenses tend to be front-loaded. For example, in Q1 we expect over $1 million in expenses from seasonal payroll taxes and costs associated with our Annual Global Sales Kick-off meeting. With that in mind, for the first quarter of 2019, we anticipate revenue of between $42 million and $42.3 million, representing growth of 38% to 39%. We anticipate adjusted EBITDA to be a loss of between $2.7 million and $2.4 million. We anticipate a non-GAAP net loss of between $6 million and $5.7 million, or a loss of between $0.19 and $0.18 per share, based on 32.0 million basic weighted average shares outstanding. Stock-based compensation expense is expected to be $9.4 million to $9.6 million in the first quarter.

In summary, we delivered a very strong performance in the fourth quarter, capping a highly successful year for the company. We are optimistic that our momentum will continue in 2019, based on our strengthening market leadership, expanding product line and growing sales capacity, all of which leaves us well positioned to continue gaining share in this multi-billion dollar opportunity.

Now operator, we'd like to open the call for questions.

Questions and Answers:

Operator

Excellent, thank you. (Operator Instructions). Our first question is from Brad Zelnick with Credit Suisse. Your line is now open.

Kevin Ma -- Credit Suisse -- Analyst

Hey, its Kevin on for Brad. Thanks for taking the question and congrats on the quarter. Can you guys give any details on how initial conversations are going with EU nations, following the relatively recent directive, and from what you've seen so far, how sophisticated are their needs generally?

Jaime Ellertson -- Chairman and Chief Executive Officer

So I mean, the directive is brand new, as your research probably shows and some of the analyst community has already documented. The EECC directive only went into place the very end of last year, start of this year. So as you can imagine, the member nations just give a hands around. First deploying the legislation and going forward. As Patrick said, we continue to see success with UMS and we believe that our scale, our brand and the integrated solutions provide a enviable position for us in that market to deliver a countrywide solution, which is what's required by the legislative directive. It also requires that a solution be able to deliver it to a mobile device and to both visitors and residents of the selected country. We just don't see any other solution that can deliver that, period. The hardware based cell broadcasting solutions, as we said, don't work. We have more referenceable accounts than anyone on the planet, and given that the technology position and the protected IP , we just feel we're in a great position. But those discussions that we've been having and continue to have around UMS population alerting, everything from wins, as we announced the City of Oslo, so major cities to whole countries, continue to move forward. The regulations and legislations should just accelerate that over the next few years.

Kevin Ma -- Credit Suisse -- Analyst

Got it. I appreciate that color. And any changes on how you're thinking about M&A strategy after the recent capital raise? I think you and Patrick both touched on this briefly in your prepared remarks, but can you expand a bit on how we should think about balancing priorities of expanding internationally versus building out your product portfolio?

Jaime Ellertson -- Chairman and Chief Executive Officer

Yeah, I mean we obviously don't have anything to announce today or we would have done it in our prepared remarks, and we don't comment on forward-looking M&A. But as we said, we hope we've earned at least the credibility that we are sensible, we call ourselves experienced. An executive team, when it comes to M&A, we're looking at almost all of our decisions as bill first, because if we can do it organically as with our Crisis Management suite that we're delivering this quarter and analytics, which we will deliver in Q3, then we're going to do that. But sometimes, a buyer-partner solution, is just a better mode-to-market market faster and allows us to access more markets.

The two specific M&A directions that we've given you in the past continue, its an expansion of our CEM suite, so that we can add additional product that expands our customer relationship, allows us to cross and upsell yet another product and grow the ASP. We want to do it, solve a bigger problem for our customers or one that helps us expand geography. Example would be, some of the European acquisitions that have opened up the Scandinavia region, where we are now the largest player, and after we convert those existing Mass Notification customers and Population Alerting customers are integrated with our Mass Notification solution, enable us to cross and upsell our other eight, nine products into those customers.

So nothing has changed in the direction. The strategic direction, we do like the fact that people will see us having the cash. It doesn't mean that we're going to do anything crazy though, because we've established the fact that we have a buying pattern in the market. We are sensible purchasers, and we want to see fairly rapid results that are accretive to shareholders.

Kevin Ma -- Credit Suisse -- Analyst

Makes sense. All right. Thank you and congrats again.

Jaime Ellertson -- Chairman and Chief Executive Officer

You bet. Thank you.

Operator

Thank you. Our next question comes from Sterling Auty with JPMorgan. Your line is now open.

Sterling Auty -- JPMorgan -- Analyst

Yeah, thanks. Hi guys. Wanted to follow up on the line of questioning around the Europe opportunity. So with the regulation and the discussions, how should we think about those sales processes, vis-a-vis what you see in the corporate side? Are they more stringent RFPs, are they more informal discussions, or they tend to be a little bit longer, what does the makeup of that process look like?

Jaime Ellertson -- Chairman and Chief Executive Officer

So in general, what we're talking about, Sterling, are they, what we call Population Alerting, which is comprised of two components, either a front-end to give a entire country the ability to communicate through multiple different vendors, including ourselves on the back-end with location-based alerting, our other population alerting solution to assist in population. The second component, LBAS, location-based alerting is the piece that we put inside carriers and lets us see who's connected to network and then communicate with even the visitors in local language, because we see their phone number and can figure out you're from the US or you're from Paris and happen to be in Norway today. So we're going to communicate French to you. And it's over standard text messaging, which is the easiest, most acceptable method. Those solutions, I want to point out, as Patrick mentioned, we have a number of existing population alerting solutions that were already too far down the track for us to change, and therefore could lead to some significant deals as those opportunities range anywhere from the low-end of just some million to a high-end of well in excess of $5 million to $10 million. So these are very large opportunities. Some are already in process, because UMS was out there for a while. With our brand and scale, we believe some of those may come to fruition, and even cause a bulge in our revenue in 2019, as early as Q1, and that's what Patrick was talking about in his prepared remarks.

The remainder that are being funneled now into a process because of the new EECC regulations, that's -- many are already in process. Others are now being accelerated, because countries are saying what legislation do I want to put in place, and do I want to wait a year and a half until I get everything in a row and then start an RFP process with only a year to implement, and these systems often take a full year to implement. So you need to do it, multi-years in advance. So we -- what we see is, we have a current pipeline of those, as I mentioned, very few of those happen to be perpetual, we're converting those all in the future, to the extent we don't disrupt the current sales opportunity to SaaS. And those are already in play or just being accelerated or funneled into a accelerated process by the legislation.

It's too early to say we've seen in the first three of our RFPs from the EECC directive. It is not too early to say, we are seeing an acceleration of current opportunities because of the EECC directive. So organizations, countries that were already starting down this path with us or others, are accelerating at that what's happened with EECC is, everyone has to do it. So now, everyone is going to be moving toward it. And so, there will be new opportunities and -- does that help you understand where we are with it?

Sterling Auty -- JPMorgan -- Analyst

Yeah, no, I think that's excellent. Maybe just one follow-up, if I may. Can you give a sense within the guidance that you've given, what does that amount for investments for capacity increases in your sales and marketing function?

Jaime Ellertson -- Chairman and Chief Executive Officer

So we, one of our international strategies and strategic pillars to continue growth, was to move forward with a substantial expansion of our Population Alerting technologies, both in Europe and Asia. And so we already are in the process of either having hired or hiring a substantial growth in that team, long before the EECC directive came out, that was in our planning of last year, when we did the UMS acquisition. They just didn't get to scale, and to some extent didn't have the brand reputation or the balance sheet to support a multi-year project. As we said, many of these projects like the ones I've mentioned, that have already been flighted (ph) on a perpetual basis, our multi-million dollar, multi-year deals. And so because of that, our brand and size helps. We started the sales expansion already in Q4 and we'll finish that off earlier this year with new bodies in both Europe and in Asia.

Sterling Auty -- JPMorgan -- Analyst

Great. Thank you.

Jaime Ellertson -- Chairman and Chief Executive Officer

You bet.

Operator

Thank you. Our next question comes from Bhavan Suri with William Blair. Your line is now open.

Bhavan Suri -- William Blair -- Analyst

Hey guys. Thanks for taking my question, and nice job. I had two questions. One, just following up on some of these questions around sales cycles and penetration, but touching on different markets, when you look at sort of some of the local markets, let's just say in the US, state, local otherwise, and you think about sort of some of the larger wins you've had broadly, and now with FedRAMP. Do you see sort of the potential for sort of a network effect, a flywheel effect. If you look at verticals, you get sort of -- the guys are at the head of that game, starting to buy and understanding the strategic importance of what everybody does and then you start to see the next five or six guys in the top 10 and then you see some of the smaller guys. And so you get to this fast baller (ph) approach. Just wanted to understand, sort of have you seen that, and then is that also applicable as you look at sort of just countries and globally, you might see in Europe, maybe in Asia. Just wanted to get some sense firstly on that sort of flywheel effect that happens, once you sort of got some critical mass?

Jaime Ellertson -- Chairman and Chief Executive Officer

Yes. The simple answer is yes and yes. Right. So we have for a long time stated that we have something we call the Everbridge Network Effect is, which when we get into a region has led to deals like Florida, Washington DC or New York State, and you get penetration you can show the local parties, that's why as an example, the major states out there that have legislation are moving toward statewide deals that are large, like California and Texas, because of wildfires or recent hurricanes. Owning the top counties like Harris County, which is bigger than half of all US states by the way, so that's a big deal, when we recorded Harris County. But it also positions us perfectly for a statewide opportunity, because who is better positioned than someone that's already connected to your citizens, already has the profile built on all your citizens, and can leverage that. And then once you win the state, it is much easier for our sales teams to go in and win the major hospitals, which count on emergency preparedness and local safety and public safety agencies, like fire and police. And then once you get those agencies and all that public environment, it's much easier to go after the major corporations, which have to operate in a community involving state and local government.

And so, it is a natural flywheel effect, and that's amplified as you can imagine, when you go to a country like the Netherlands. You already have the entire country of Netherlands. Then in this most recent quarter, we announced one deal that equaled our entire revenue for that country last year, in one deal, and it was with essentially the largest by spending, agency, within the Netherlands government. And so you do get a flywheel effect. You get this, what we call Everbridge network effect, and it feeds on itself, as you become and we are the only public company in the space, in North America. On the broader international markets, we have unique technology and the only one that has countrywide wins that play in the Mass Notification space for either the public or the private markets, and the continuation of that just makes us the easy choice.

We certainly believe we are the best solution in the world, in terms of keeping people safe and businesses running. But we accelerate that success, because we're also a safe solution, reliably delivering, scalably delivering globally for customers. And so there is that network effect, and that's what we talk about, so yes and yes.

Bhavan Suri -- William Blair -- Analyst

Thanks Jaime. That's helpful. I guess, one follow-up to that, just a little more broadly too. So there are sort of other solutions out in the market, point solutions, whatever you want to call them. And as you think about orchestration right, you've already talked about analytics and things like that. But orchestration becomes important like -- I'll give you an example, I am in Chicago, I don't need to notification from a city that's really cold. I don't need a notification of a building that watch out for falling ice. I don't need a notification from William Blair to say go home and don't come because it's minus 20 degrees. But those might be different solutions, and two of them might be Everbridge. But as you think about orchestration and sort of a layer above it all to manage that, do you think you guys end up owning and building that space and integrating with sort of these point solutions, which are sort of I guess competitors, or do you think there's room for sort of this neutral third party kind of on that role. How do you that think of sort of -- that cold layer sort of orchestrating across a lot of your alerts, which ones, obviously you have them, that gives you a huge network of sites, but also a crossover to competitors. Just love to get your thought there. Thank you.

Jaime Ellertson -- Chairman and Chief Executive Officer

You bet, well -- trying to keep it brief and lot of time for more questions. Look, we need to understand who those competitors are, we don't always see them. So we don't recognize a lot of competition, but all kidding aside, as we did earlier this past year in 2018, we announced our orchestration engine for IT Alerting products and the ability to operationalize more and more alerting, as you know, three years ago, we didn't have an IT Alerting product, it's a relatively new product, which includes scheduling and the orchestration of a process from ServiceNow, an ITSM player through to delivering the right message to the right person to get the job done faster and reduce the impact of an IT outage. The same thing can be done for safety and compliance, for regulatory, for a lot of different areas of alerting. And so, yes, we think that orchestrating the alerting across an enterprise, everything from historic Mass Notification to a city or business operation using IoT in the future, is a core business for us and we will continue to expand and lead those markets.

Bhavan Suri -- William Blair -- Analyst

Great. Thank you for taking my questions guys. Nice job.

Jaime Ellertson -- Chairman and Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from Tom Roderick with Stifel. Your line is now open.

Tom Roderick -- Stifel -- Analyst

Hi, gentlemen. Afternoon. Thank you for taking my question. So Patrick, I wanted to dive in a little bit more in your guidance and appreciate the knowledge and understanding around lapping UMS, so the growth rate will moderate. But if we sort of look at where all of our numbers were for the back half of the year, particularly if you look at all of 2019 and looking at your guidance for the full year, it's notably ahead for the full year, while the first quarter was sort of right in line with our expectations. So I'm hoping to understand a little bit more, as I think about the organic acceleration, that looks like you're modeling in, how much of that is sort of tuned into some of the perpetual license work you're talking about, you mentioned that creates a little bit of kind of a bulge in the revenue. So maybe you could talk to that and the impact in the numbers? And then secondarily, any other initiatives or recent bookings that have a timing mechanism perhaps, that would drive some acceleration in the numbers in the second half, just so we can understand why you guys are modeling so much above where we're at? Thanks.

Patrick Brickley -- Vice President of Finance and Accounting

Sure. So the -- we are a pure play SaaS company, and so just to clarify in perpetual, there will be an impact in Q2 to the tune of roughly $1 million and $1.5 million, but it will be one-time and considering that we are guiding full year to $196 million, give or take, it's less than 1% of the total business. So I just want to stress the point, that while we do have an impact of perpetual, we're talking about really a single deal and one-time. And we just wanted to call it out to help you where with -- as you kind of reswizzle your models.

From there, we feel really strongly about our organic momentum and whether it be our rapid progress with CEM and a strong pipeline as we head into 2019, or also as those deferred revenue haircuts wear off, we get a little bit -- we get full credit for the businesses that we've now integrated, we acquired in 2018. But we now have fully incorporated those into the Everbridge organic business, and so, we'll see continued momentum there as well. So we feel like as we head into 2019, both in top line and bottom line, we feel like we're firing on all cylinders.

Tom Roderick -- Stifel -- Analyst

Outstanding, that's great, thank you. Jaime, as I think about the CEM market, you guys have sort of largely helped to define that market itself. I recognize 5x to 15x is a great sort of return or upsell relative to traditional deals, but pretty broad range. Can you just kind of give us a sense as to how those deals are progressing in size in the -- in roughly a year, since you guys have have launched CEM and what you think happens from here? Do they sort of naturally get bigger, do you have existing customers that dip their toe in on CEM coming back with much broader enterprise standardizations, what does the trend line looks like from here? Thanks.

Jaime Ellertson -- Chairman and Chief Executive Officer

Sure John. I mean yeah, I think generally, they continue to accelerate and we believe the momentum is going to continue across the board. Now, when you think about CEM, remember, it is a multi-product strategy right. So it used to be -- you have to have three out of our products. That product set, as of mid this year, will be six products. So if four products resulted in a $300,000 or $400,000 average deal size, which by the way, we measure success over our single product, as we used to sell with the additional products that we built and talked about repeatedly with you, a single deal from Mass Notification or IT Alerting being $50,000, $60,000, $70,000. So $300,000 to $400,000 for three products or four together, that's a substantial uplift. And the whole idea is to get the customer believing the same vision, that if we can provide you a suite of products, a-la any other three letter acronym company, HCM, the Workdays of the world or ERPs, the SDP, the Oracles of the world or CRMs with multiple products, we're trying to deliver that single pane of glass to manage critical events for both individual people safety, as well as business operations. And four or three equal $300,000 to $400,000, more is better.

So five to six applications hopefully resulting in an average deal, as we announced, they all bought everything in the suite. With six deals, that deal would have gone from whatever it was $600,000, $700,000 to a $1 million. So by continuing to flush out the suite with the other applications and mature at the same time, the overall sales force and the number of salespeople that are selling the product, we started the year with less than our full corporate team selling only to the corporate space, and as we enlarge the number of verticals we're selling and the number of salespeople, you're naturally going to get a lift as well.

So both of those are very positive drivers to the overall CEM success and that's why we feel good about it's continued momentum. The deals are going to get bigger because we're going to have more products to sell, and the salesforce is going to get more knowledgeable with used cases and benefit to customers, and that's going to drive individual sales success with more deals.

Tom Roderick -- Stifel -- Analyst

Outstanding. That's it from me. Thank you, guys nice job.

Jaime Ellertson -- Chairman and Chief Executive Officer

You bet.

Operator

Thank you. Our next question comes from Terry Tillman with SunTrust Robinson. Your line is now open.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Hey gentlemen. Can you hear me, OK.

Jaime Ellertson -- Chairman and Chief Executive Officer

We can, Terry. Go ahead.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Yeah, there's a lot of goodness there. We could probably keep on the phone till 9:00 pm if you want to. I had a ton of questions, but I'm going to narrow it down to one question, believe or not. And I'm really getting in the weeds here, but Safety Connection, that product, when you launched it was the fastest growing product that out of the gate, you saw a quick traction. But it sounds like now you're seeing it in international markets in the public sector. Maybe, Jaime, you could talk a little bit about Safety Connection in terms of the expansiveness of the opportunity with that product, in 2019 and beyond? Thank you.

Jaime Ellertson -- Chairman and Chief Executive Officer

Sure. Well, first of all, it's approaching 11:30 for me over here, I mean our European headquarters speaking to you, but we love doing it. But I think Safety Connection is sometimes overlooked and Safety Connection is by far our most singly disruptive product, because with that product we're going into a workplace today, because it's primarily historically sold into the private markets. Now you're starting to see leading public entities which substantially expand Safety Connection, the Parliament at Singapore, our government deals that we're doing around wearable devices this next year, which we're very excited about, areas like the hotel industry, California which is going to require a wearable panic button. You got to funnel that information to the sum solution that can figure out where you are when you push a button. And so Safety Connection is disruptive in that. Employees are becoming more mobile, and as more corporations, many, many of the entities that are on the phone today, there are corporations are moving to a pure hoteling concept, where people will grab a desk with a mobile ID when they come in the office. It may not be the same one for a month or maybe the exact same one, but it won't be in office necessarily. It will be a collaborative work space and as more campuses are built and more global trade is done, through a requirement to be able to figure out where people are, with more location vectors than turning on your mobile phone and spying on you or tracking you the entire time, are required. And so we basically have invented that mobile safety and security market, and we've written that wave and that's in its early stages. People are just figuring out the privacy aspects, number of leading financial institutions that we work with are just figuring out how to roll-out Safety Connection globally. You heard about HSBC today and on others. Those are very large accounts, and we see that market continuing and that is one of the driving apps, I would say, behind CEM; because it doesn't make much sense to see a major event and overlay your assets, your physical infrastructure, if your people aren't located there.

So you need a combination of all three. You need the event. You need to understand where your buildings and locations and even brand are. But then you also need to see where your people are, and often, they're out into mobile. And so that's what Safety Connection brings together, that's why you continue to see, like in Q4, 90% year-over-year growth and that's a significant product now in terms of overall revenue for us.

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Thanks Jaime. Congrats Ken, we're going to miss you. Bye.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Thanks. Appreciate it.

Operator

Thank you. Our next question comes from Brian Peterson with Raymond James. Your line is now open.

Kevin Ruth -- Raymond James -- Analyst

Hi guys. Kevin here on for Brian. Thanks for taking my call. Understandably, the large deal in CEM closures can be lumpy. But how should we think about the trajectory for ASP growth, as you look out to 2019?

Jaime Ellertson -- Chairman and Chief Executive Officer

Yeah, the only thing I would tell and Patrick may have some comments too as it relates to guidance. But look, CEM is still in its early phases, so rolling 35 or so customers in. So we're still gaining an understanding of the buying pattern. We reducing the selling cycle and as we said, we're adding products, which increases the ASP of the CEM deals, because they are all by definition, they have to be multi-product deals. In fact when we released the two new products, both a Crisis Management and Analytics by Q3 will require that -- a customer has to buy four products to qualify for CEM. So we keep the definitions a reasonably high bar and a true multi-product integrated solution sale. But the very nature of adding the products increases the ASP and the knowledge of the salesforce. And so because they are large deals, large deals take a little bit longer. They're probably yet a third longer than any of our normal deals to 50% longer, because they're five times to 15 times larger. I said in my prepared remarks between 5 times and 15 times, the size of our normal single product deal. So that does lead to a larger ASP, but it also leads to a longer sales cycle and therefore a little lumpiness.

We're early in the game. They're going to continue, and we believe we've got to continue the momentum as we rolled out to broader, so you should see continued success. But beyond that, I think it's a little early for us to give any other specific guidance. I don't know if you'd add to that Patrick or anything else around CEM and lumpiness in large deals?

Patrick Brickley -- Vice President of Finance and Accounting

Yeah. And in particular on ASP, we don't guide to it. But as have you heard, Jaime and Ken say, it's a lot easier to get to $500 million in revenue by increasing the ASP, rather than trying to make it up on volumes. So we've been architecting growth in our ASP over the past few years, and we are already now architecting it for the next few years. So should anticipate that metric will continue to grow up, driven by a number of factors, CEM being just one of them.

Kevin Ruth -- Raymond James -- Analyst

Got it. And then just a quick one on your deferred revenue results, have you seen any recent changes to contract durations or would you expect that to have an impact on your billings going forward?

Patrick Brickley -- Vice President of Finance and Accounting

The only change that we've seen is kind of a gradual increase in the average duration -- a third of our business is still state and local government, which typically will go year-to-year, even though we might win kind of a five-year deal. They only get budget for one year at a time. So we count those as one year. As the mix has kind of gradually shifted to more like 55% corporate, it used to be closer to 50%, we see an uptick in that overall average -- it used to be 2, I think it's now 2.2. And that's -- as long as the mix continues to gradually shift toward corporate, you might see a gradual increase in that metric. Corporate tends to be three-plus years on average.

Kevin Ruth -- Raymond James -- Analyst

That's helpful, thanks.

Jaime Ellertson -- Chairman and Chief Executive Officer

You bet.

Operator

Thank you. Our next question comes from Brad Sills with Bank of America. Your line is now open.

Brad Sills -- Bank of America -- Analyst

Hey guys, congratulations Ken on your next move We'll miss you.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Thank you.

Brad Sills -- Bank of America -- Analyst

Yeah, I wanted to ask you guys just kind of a -- on that previous question, with regards to your move into larger deals CEM etcetera, how has the sales force changed and how is it going to change going forward, in terms of addressing larger deals that you mentioned?

Jaime Ellertson -- Chairman and Chief Executive Officer

Yeah, I mean we talked about at last year that we were on a multi-year transition to a much more robust and mature enterprise selling motion and team. We said at the -- kind of as we ended this last quarter and certainly Q4 of this past year, that we believe we're about halfway through that transition, and we haven't had a hiccup, which is half the battle right. We're trying to avoid, as we drive the car faster from 60 to 70 miles an hour, we're changing the tires and we don't want to drive off the road or fail on our consistent execution. So --

sometimes that by itself is half the battle and we were very excited that almost all our key indicators from the experience of the sales team, the clear enterprise experience that we've added going from a single product to selling four or five products at once, and $50,000 ASP to $500,000, requires a more mature, more focused sales team.

And so last year, we focused on hiring stronger and maintaining our strongest people with better training, focusing on productivity per rep, and the average quota and quota attainment for reps and in almost every case, all of our metrics were up into the right and some very significantly and that led to some of our success.

As we approach 2019, we're focused on further delivering more clear benefits to our customers on the ROI for Critical Event Management, focused around vertical organization of the sales force. So we rolled out two or three new verticals at a recent kick-off and we'll continue to specialize around these larger deals, more on vertical than on a particular group within the sales force. So that some of those would have to learn everything from oil and gas to healthcare and all the benefits for CEM. And so that's a transition that will continue this year, and we expect some results. The team, new leadership, Pat Galvin, who now leads our North American sales team, as Gary Phillips moved over to Head of Corporate Development, is doing a very good job led by Bob Hughes and the rest of the team and we expect that transition to continue.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

We have time for one more call -- one more question, and then we have to end, to do callbacks with individual analysts. So thank you. One more last call.

Operator

All right. Our final question comes from Scott Berg with Needham & Company. Your line is now open. It looks like he disconnected. Would you like to take one more person?

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Certainly.

Operator

All right. We will take Brent Bracelin with KeyBanc Capital. Your line is now open.

Brent Bracelin -- KeyBanc Capital -- Analyst

This is Brent. Thanks for kind of squeezing me in there. Jaime, just wanted to ask a (Technical Difficulty) question here, just because we've seen you guide at the beginning of the last two years to 30% growth, you're now guiding at 33% growth. We've touched on this quite a bit today in the call, but as you think about just comparing and contrasting this year versus last year, what are the growth drivers that are driving the optimism here? One or two factors that you're a little more optimistic about kind of organic growth this year, versus the last two years?

Jaime Ellertson -- Chairman and Chief Executive Officer

I think we're guiding at 33% and 34%. But -- Patrick can correct me there. But yes, so I think it's just exactly what we talked about. A year ago, we were beginning an enterprise sales transition around our CEM solution and we are just introducing at scale into the market with only 10 successes you really can't tell whether you're really good at something and the market is really reciprocating and it exists, or you're throwing a party and a few people showed up, but it's just not going to work out. And so in our case, we're seeing CEM work and work at scale with the same repeated model, and we're getting better at the value drivers for customers and the ROI that we can present to a C-level Officer across -- Chief Security Officers, Chief Risk Officers, CFO, CIOs etcetera, COOs. And so that is certainly buoying our confidence in our ability to execute around that organic growth and our CEM opportunity. And then the fact that we're adding two more products to expand this suite by 50% in 2019. And the backdrop to our core business has just never been better. I mean, we have a brand new federal market which we couldn't have gotten out of the blocks faster in 2018 than we did. Still believe that the federal government may present one or two of our largest customers in the coming years. And then on top of that Population Alerting internationally is poised to grow as -- without using the word explode, grow as fast as we can probably manage it, with new regulatory and legislation environments that mandate every single country across Europe, not the few that we have or the few large ones you think about, but every country has to implement a solution that is pretty much delivered by us and us alone internationally.

In addition to Asia, which continues to grow at record paces. I want to remind everyone that our international business, half of that growth of 168%, 2018 was organic, and half was acquired. And in both cases they did substantially better than they did the previous year. So you've got both CEM and our continued success and maturation there, and expansion of product set, and then you got a core Population Alerting including the federal government here to drive continued success and internationally, as strong drivers with the legislations you could get. I would think that would allow us to conclude that numbers and trajectory are fairly reasonable at the roughly 34% year-over-year growth. And that's organic, obviously, we could do and continue to believe that M&A is key to our strategy and so could see certainly 5% to 7% added in that mix, on top of with successful execution of M&A in 2019.

Brent Bracelin -- KeyBanc Capital -- Analyst

Great Jaime. Helpful color as always and Ken, it has been great working with you and best of luck.

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Thank you.

Jaime Ellertson -- Chairman and Chief Executive Officer

Thank you. Thanks, Brent. So in conclusion, we'll wrap it up, because we do need other (ph) calls. We appreciate you joining the call. I think my last summary -- summarized it properly. We're excited about 2019. We're excited about continuing to execute, both our strategy and on behalf of shareholders. Thanks very much for attending the call today.

Operator

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you very much for your participation and you may all disconnect. Have a wonderful night.

Duration: 72 minutes

Call participants:

Kenneth Goldman -- Senior Vice President and Chief Financial Officer

Jaime Ellertson -- Chairman and Chief Executive Officer

Patrick Brickley -- Vice President of Finance and Accounting

Kevin Ma -- Credit Suisse -- Analyst

Sterling Auty -- JPMorgan -- Analyst

Bhavan Suri -- William Blair -- Analyst

Tom Roderick -- Stifel -- Analyst

Terry Tillman -- SunTrust Robinson Humphrey -- Analyst

Kevin Ruth -- Raymond James -- Analyst

Brad Sills -- Bank of America -- Analyst

Brent Bracelin -- KeyBanc Capital -- Analyst

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