Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud
services for video, today announced financial results for the
second quarter ended June 30, 2017.
“Brightcove reported second quarter financial results that
exceeded the high end of our revenue guidance but fell short of our
profitability expectations due primarily to additional investments
that were made during the second quarter to support one of our
strategic customers. We remain on track to return to sustainable
adjusted EBITDA profitability in the fourth quarter,” said Andrew
Feinberg, acting Chief Executive Officer of Brightcove.
Feinberg added, “During the second quarter, we delivered another
strong bookings performance, driven by our expanded product
portfolio, and we remain on track to achieve our mid- to high-teens
bookings growth target for the year. We are delivering significant
value to our customers, which gives us confidence that our
continued innovation and increased focus on go-to-market execution
will drive improved operational performance and long-term
shareholder value.”
Second Quarter 2017 Financial Highlights:
- Revenue for the second quarter
of 2017 was $38.8 million, an increase of 5% compared to $37.0
million for the second quarter of 2016. Subscription and support
revenue was $35.5 million, compared to $35.1 million for the second
quarter of 2016.
- Gross profit for the second
quarter of 2017 was $22.2 million, representing a gross margin of
57%, compared to a gross profit of $23.5 million for the second
quarter of 2016. Non-GAAP gross profit for the second quarter of
2017 was $22.8 million, representing a non-GAAP gross margin of
59%, compared to a non-GAAP gross profit of $24.1 million for the
second quarter of 2016. Non-GAAP gross profit and non-GAAP gross
margin exclude stock-based compensation expense and the
amortization of acquired intangible assets.
- Loss from operations was $7.9
million for the second quarter of 2017, compared to a loss from
operations of $2.2 million for the second quarter of 2016. Non-GAAP
loss from operations, which excludes stock-based compensation
expense and the amortization of acquired intangible assets, was
$5.5 million for the second quarter of 2017, compared to non-GAAP
loss from operations of $302,000 during the second quarter of
2016.
- Net loss was $7.7 million, or
$0.22 per diluted share, for the second quarter of 2017. This
compares to a net loss of $2.4 million, or $0.07 per diluted share,
for the second quarter of 2016. Non-GAAP net loss, which excludes
stock-based compensation expense and the amortization of acquired
intangible assets, was $5.3 million for the second quarter of 2017,
or $0.16 per diluted share, compared to non-GAAP net loss of
$489,000 for the second quarter of 2016, or $0.01 per diluted
share.
- Adjusted EBITDA loss was $4.3
million for the second quarter of 2017, compared to adjusted EBITDA
of $885,000 for the second quarter of 2016. Adjusted EBITDA
excludes stock-based compensation expense, the amortization of
acquired intangible assets, depreciation expense, other
income/expense and the provision for income taxes.
- Cash flow used in operations was
$119,000 for the second quarter for 2017, compared to cash flow
from operations of $2.0 million for the second quarter of
2016.
- Free cash flow was negative
$937,000 after the company invested $818,000 in capital
expenditures and capitalization of internal-use software during the
second quarter of 2017. Free cash flow was $1.0 million for the
second quarter of 2016.
- Cash and cash equivalents were
$28.4 million as of June 30, 2017 compared to $29.2 million at
March 31, 2017.
A Reconciliation of GAAP to Non-GAAP results has been provided
in the financial statement tables included at the end of this press
release. An explanation of these measures is also included below
under the heading “Non-GAAP Financial Measures.”
Other Second Quarter and Recent Highlights:
- Average annual subscription revenue per
premium customer was $71,000 in the second quarter of 2017,
excluding starter customers who had average annualized revenue of
$5,000 per customer. This compares to $70,000 in the comparable
period in 2016.
- Recurring dollar retention rate was 91%
in the second quarter of 2017, which was in-line with our
historical target of the low to mid 90% range.
- Ended the quarter with 4,304 customers,
of which 2,079 were premium.
- New enterprise customers and enterprise
customers who expanded their relationship during the quarter
included: Avon, Boston Children’s Hospital, Konica-Minolta,
Masterclass, Navy Federal Credit Union, SAP, The Vitamin Shoppe and
Under Armour, among others.
- New media customers and media customers
who expanded their relationship during the quarter included: The
Africa Channel, AsiaNet News Media and Entertainment, Entravision,
Football Federation Australia, Foxtel, Madison Square Garden
Networks, Major League Soccer, Masterclass, Republic World,
RugbyPass, and TV Asahi, among others.
- Introduced several new innovations at
its annual PLAY conference that further empower media, marketers
and enterprises:
- Brightcove Live is a
high-performance, scalable live streaming service that includes
server-side ad insertion, cloud DVR, content encryption, on-the-fly
clipping and VOD asset creation to deliver seamless monetization
and clipping for live events and 24/7 channels.
- Brightcove SSAI (Server-Side
Ad Insertion) improves monetization, minimizes the impact of ad
blockers and delivers a TV-like experience across every
device.
- Dynamic Delivery is Brightcove’s
next-generation media delivery platform that offers enhanced reach,
flexibility and performance with less storage.
- In-Page Experiences enables
users to build customized video layouts that incorporate
calls-to-action and dynamic capabilities to deliver different
experiences before, during and after a video is played.
- Audience Profiles allows users
to analyze the viewing history of individual viewers, providing
insight that can be used to guide both short-term actions and
long-term program strategies.
- Context Aware Encoding, now in
beta, is a new video compression technology that utilizes machine
learning to deliver higher quality viewer experiences while also
reducing storage and bandwidth costs by up to 50%.
Business Outlook
Based on information as of today, July 26, 2017, the Company is
issuing the following financial guidance:
Third Quarter 2017:
- Revenue is expected to be in the
range of $37.5 million to $38.5 million, including approximately
$2.5 million of professional services revenue.
- Non-GAAP loss from operations is
expected to be in the range of $3.2 million to $3.7 million, which
excludes stock-based compensation of approximately $1.7 million and
the amortization of acquired intangible assets of approximately
$700,000.
- Adjusted EBITDA loss is expected
to be in the range of $1.9 million to $2.4 million, which excludes
stock-based compensation of approximately $1.7 million, the
amortization of acquired intangible assets of approximately
$700,000, depreciation expense of approximately $1.3 million and
other income/expense and the provision for income taxes of
approximately $150,000.
- Non-GAAP net loss per diluted
share is expected to be $0.10 to $0.11, which excludes
stock-based compensation of approximately $1.7 million and the
amortization of acquired intangible assets of approximately
$700,000, and assumes approximately 34.5 million weighted-average
shares outstanding.
Full Year 2017:
- Revenue is expected to be in the
range of $152.0 million to $155.0 million. Professional services
revenue is expected to be in a range of $10.5 million to $11.0
million.
- Non-GAAP loss from operations is
expected to be in the range of $11.8 million to $13.3 million,
which excludes stock-based compensation of approximately $7.2
million and the amortization of acquired intangible assets of
approximately $2.7 million.
- Adjusted EBITDA loss is expected
to be in the range of $7.0 million to $8.5 million, which excludes
stock-based compensation of approximately $7.2 million, the
amortization of acquired intangible assets of approximately $2.7
million, depreciation expense of approximately $4.8 million and
other income/expense and the provision for income taxes of
approximately $100,000.
- Non-GAAP net loss per diluted
share is expected to be $0.34 to $0.39, which excludes
stock-based compensation of approximately $7.2 million and the
amortization of acquired intangible assets of approximately $2.7
million, and assumes approximately 34.4 million weighted-average
shares outstanding.
Conference Call Information
Brightcove will host a conference call today, July 26, 2017, at
5:00 p.m. (Eastern Time) to discuss the Company's financial results
and current business outlook. A live webcast of the call will be
available at the “Investors” page of the Company’s website,
http://investor.brightcove.com. To access the call, dial
877-407-3982 (domestic) or 201-493-6780 (international). A replay
of this conference call will be available for a limited time at
844-512-2921 (domestic) or 412-317-6671 (international). The replay
conference ID is 13666417. A replay of the webcast will also be
available for a limited time at http://investor.brightcove.com.
About Brightcove
Brightcove Inc. (Nasdaq: BCOV) is the leading global provider of
powerful cloud solutions for delivering and monetizing video across
connected devices. The company offers a full suite of products and
services that reduce the cost and complexity associated with
publishing, distributing, measuring and monetizing video across
devices. Brightcove has thousands of customers in over 70 countries
that rely on the company’s cloud solutions to successfully publish
high-quality video experiences to audiences everywhere. To learn
more, visit www.brightcove.com.
Forward-Looking Statements
This press release includes certain “forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements concerning our financial guidance for
the third fiscal quarter of 2017 and full year 2017, our bookings
growth, and our ability to execute our go-to-market strategy to
drive improved operational performance and long-term shareholder
value. These forward-looking statements include, but are not
limited to, plans, objectives, expectations and intentions and
other statements contained in this press release that are not
historical facts and statements identified by words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" or words of similar meaning. These forward-looking
statements reflect our current views about our plans, intentions,
expectations, strategies and prospects, which are based on the
information currently available to us and on assumptions we have
made. Although we believe that our plans, intentions, expectations,
strategies and prospects as reflected in or suggested by those
forward-looking statements are reasonable, we can give no assurance
that the plans, intentions, expectations or strategies will be
attained or achieved. Furthermore, actual results may differ
materially from those described in the forward-looking statements
and will be affected by a variety of risks and factors that are
beyond our control including, without limitation: our ability to
scale and adapt our existing infrastructure to accommodate customer
requirements; our ability to execute on booking and revenue growth
and operating margin improvements; expectations regarding the
widespread adoption of customer demand for our products; the
effects of increased competition and commoditization of services we
offer, including data delivery and storage; our ability to expand
the sales of our products to customers located outside the U.S.;
keeping up with the rapid technological change required to remain
competitive in our industry; our ability to retain existing
customers; our ability to successfully recruit additional
highly-qualified personnel and execute our CEO transition; the
price volatility of our common stock; and other risks set forth
under the caption "Risk Factors" in our most recently filed Annual
Report on Form 10-K, as updated by our subsequently filed Quarterly
Reports on Form 10-Q and our other SEC filings. We assume no
obligation to update any forward-looking statements contained in
this document as a result of new information, future events or
otherwise.
Non-GAAP Financial Measures
Brightcove has provided in this release the non-GAAP financial
measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP
income (loss) from operations, non-GAAP net income (loss), adjusted
EBITDA and non-GAAP diluted net income (loss) per share. Brightcove
uses these non-GAAP financial measures internally in analyzing its
financial results and believes they are useful to investors, as a
supplement to GAAP measures, in evaluating Brightcove's ongoing
operational performance. Brightcove believes that the use of these
non-GAAP financial measures provides an additional tool for
investors to use in evaluating ongoing operating results and trends
and in comparing its financial results with other companies in
Brightcove’s industry, many of which present similar non-GAAP
financial measures to investors. As noted, the non-GAAP financial
results discussed above of non-GAAP gross profit, non-GAAP gross
margin, non-GAAP income (loss) from operations, non-GAAP net income
(loss) and non-GAAP diluted net income (loss) per share exclude
stock-based compensation expense, the amortization of acquired
intangible assets and merger-related expenses. The non-GAAP
financial results discussed above of adjusted EBITDA is defined as
consolidated net income (loss), plus stock-based compensation
expense, the amortization of acquired intangible assets,
merger-related expenses, depreciation expense, other
income/expense, including interest expense and interest income, and
the provision for income taxes. Merger-related expenses include
fees incurred in connection with closing an acquisition in addition
to fees associated with the retention of key employees. Non-GAAP
financial measures have limitations as an analytical tool and
should not be considered in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. Investors
are encouraged to review the reconciliation of these non-GAAP
measures to their most directly comparable GAAP financial measures.
As previously mentioned, a reconciliation of our non-GAAP financial
measures to their most directly comparable GAAP measures has been
provided in the financial statement tables included below in this
press release. The Company’s earnings press releases containing
such non-GAAP reconciliations can be found on the Investors section
of the Company’s web site at http://www.brightcove.com.
Brightcove Inc. Condensed Consolidated Balance
Sheets (in thousands)
June 30, 2017 December 31, 2016 Assets Current
assets: Cash and cash equivalents $ 28,351 $ 36,813 Accounts
receivable, net of allowance 23,153 21,575 Prepaid expenses and
other current assets 7,517 5,897 Total
current assets 59,021 64,285 Property and equipment, net 9,065
9,264 Intangible assets, net 9,585 10,970 Goodwill 50,776 50,776
Deferred tax asset 135 121 Other assets 920
1,008 Total assets $ 129,502 $ 136,424
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 8,467 $ 5,327 Accrued expenses 13,538 15,705
Capital lease liability 404 489 Equipment financing 181 307
Deferred revenue 36,088 34,665 Total
current liabilities 58,678 56,493 Deferred revenue, net of current
portion 31 91 Other liabilities 1,378 1,644
Total liabilities 60,087 58,228 Stockholders' equity:
Common stock 34 34 Additional paid-in capital 234,698 230,788
Treasury stock, at cost (871 ) (871 ) Accumulated other
comprehensive loss (915 ) (1,172 ) Accumulated deficit
(163,531 ) (150,583 ) Total stockholders’ equity
69,415 78,196 Total liabilities and
stockholders' equity $ 129,502 $ 136,424
Brightcove Inc. Condensed Consolidated Statements
of Operations (in thousands, except per share amounts)
Three Months
Ended June 30, Six Months Ended June 30,
2017 2016 2017
2016 Revenue: Subscription and support
revenue $ 35,528 $ 35,080 $ 69,770 $ 69,733 Professional services
and other revenue 3,225 1,880
6,555 3,519 Total revenue 38,753 36,960 76,325
73,252 Cost of revenue: (1) (2) Cost of subscription and support
revenue 13,102 11,675 25,256 23,350 Cost of professional services
and other revenue 3,476 1,778
6,540 3,367 Total cost of revenue
16,578 13,453 31,796
26,717 Gross profit 22,175 23,507
44,529 46,535 Operating
expenses: (1) (2) Research and development 8,279 7,255 16,473
14,681 Sales and marketing 15,904 13,976 29,805 26,511 General and
administrative 5,876 4,487 11,267 9,064 Merger-related -
- - 21 Total
operating expenses 30,059 25,718
57,545 50,277 Loss from operations (7,884 )
(2,211 ) (13,016 ) (3,742 ) Other income (expense), net 314
(91 ) 452 (122 ) Net loss before
income taxes (7,570 ) (2,302 ) (12,564 ) (3,864 ) Provision for
income taxes 108 96 187
141 Net loss $ (7,678 ) $ (2,398 ) $ (12,751 ) $
(4,005 ) Net loss per share—basic and diluted Basic $ (0.22
) $ (0.07 ) $ (0.37 ) $ (0.12 ) Diluted (0.22 ) (0.07
) (0.37 ) (0.12 ) Weighted-average
shares—basic and diluted Basic 34,247 32,794 34,152 32,760 Diluted
34,247 32,794 34,152 32,760 (1) Stock-based compensation
included in above line items: Cost of subscription and support
revenue $ 89 $ 68 $ 191 $ 110 Cost of professional services and
other revenue 59 32 119 89 Research and development 341 181 748 570
Sales and marketing 517 497 1,263 979 General and administrative
680 347 1,155 836 (2) Amortization of acquired
intangible assets included in the above line items: Cost of
subscription and support revenue $ 508 $ 508 $ 1,015 $ 1,016
Research and development - 32 11 63 Sales and marketing 166 244 359
470
Brightcove Inc. Condensed Consolidated
Statements of Cash Flows (in thousands)
Six Months Ended June 30, Operating
activities 2017 2016
Net loss $ (12,751 ) $ (4,005 ) Adjustments to reconcile net loss
to net cash (used in) provided by operating activities:
Depreciation and amortization 3,665 3,985 Stock-based compensation
3,476 2,584 Provision for reserves on accounts receivable 96 165
Changes in assets and liabilities: Accounts receivable (1,606 )
2,364 Prepaid expenses and other current assets (2,421 ) (1,647 )
Other assets 92 (231 ) Accounts payable 3,959 881 Accrued expenses
(2,457 ) (1,067 ) Deferred revenue 1,233 1,980
Net cash (used in) provided by operating activities
(6,714 ) 5,009
Investing activities
Cash paid for purchase of intangible asset - (300 ) Purchases of
property and equipment, net of returns (650 ) (1,026 )
Capitalization of internal-use software costs (1,149 )
(1,677 ) Net cash used in investing activities (1,799
) (3,003 )
Financing activities Proceeds from
exercise of stock options 277 188 Payments of withholding tax on
RSU vesting (118 ) (108 ) Proceeds from equipment financing - 604
Payments on equipment financing (152 ) (122 ) Payments under
capital lease obligation (278 ) (461 ) Net cash (used
in) provided by financing activities (271 ) 101
Effect of exchange rate changes on cash and cash
equivalents 322 450 Net
(decrease) increase in cash and cash equivalents (8,462 ) 2,557
Cash and cash equivalents at beginning of period 36,813
27,637 Cash and cash equivalents at end of
period $ 28,351 $ 30,194
Brightcove
Inc. Reconciliation of GAAP Gross Profit, GAAP Loss From
Operations, GAAP Net Loss and GAAP Net Loss Per Share to
Non-GAAP Gross Profit, Non-GAAP (Loss) Income From Operations,
Non-GAAP Net (Loss) Income and Non-GAAP Net (Loss) Income Per
Share (in thousands, except per share amounts)
Three Months Ended
June 30,
Six Months Ended June 30, 2017
2016 2017 2016
GROSS PROFIT: GAAP gross profit $ 22,175 $ 23,507 $ 44,529 $
46,535 Stock-based compensation expense 148 100 310 199
Amortization of acquired intangible assets 508
508 1,015 1,016 Non-GAAP gross
profit $ 22,831 $ 24,115 $ 45,854 $ 47,750
LOSS FROM OPERATIONS: GAAP loss from operations $ (7,884 ) $
(2,211 ) $ (13,016 ) $ (3,742 ) Stock-based compensation expense
1,686 1,125 3,476 2,584 Merger-related expenses - - - 21
Amortization of acquired intangible assets 674
784 1,385 1,549 Non-GAAP (loss)
income from operations $ (5,524 ) $ (302 ) $ (8,155 ) $ 412
NET LOSS: GAAP net loss $ (7,678 ) $ (2,398 ) $ (12,751 ) $ (4,005
) Stock-based compensation expense 1,686 1,125 3,476 2,584
Merger-related expenses - - - 21 Amortization of acquired
intangible assets 674 784 1,385
1,549 Non-GAAP net (loss) income $ (5,318 ) $
(489 ) $ (7,890 ) $ 149 GAAP diluted net loss per share $
(0.22 ) $ (0.07 ) $ (0.37 ) $ (0.12 ) Non-GAAP diluted net (loss)
income per share $ (0.16 ) $ (0.01 ) $ (0.23 ) $ 0.00
Shares used in computing GAAP diluted net (loss) income per share
34,247 32,794 34,152 32,760 Shares used in computing Non-GAAP
diluted net (loss) income per share 34,247 32,794 34,152 33,787
Brightcove Inc. Calculation of Adjusted
EBITDA (in thousands)
Three Months Ended June 30, Six Months
Ended June 30, 2017
2016 2017
2016 Net loss $ (7,678 ) $ (2,398 ) $ (12,751 ) $
(4,005 ) Other (income) expense, net (314 ) 91 (452 ) 122 Provision
for income taxes 108 96 187 141 Merger-related expenses - - - 21
Depreciation and amortization 1,931 1,971 3,665 3,985 Stock-based
compensation expense 1,686 1,125
3,476 2,584 Adjusted EBITDA $ (4,267 ) $ 885
$ (5,875 ) $ 2,848
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version on businesswire.com: http://www.businesswire.com/news/home/20170726006158/en/
Investor Contact:ICR for BrightcoveBrian Denyeau,
646-277-1251brian.denyeau@icrinc.comorMedia
Contact:Brightcove Inc.Phil LeClare,
617-674-6510pleclare@brightcove.com
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