Brightcove Inc. (Nasdaq: BCOV), the world’s most trusted
streaming technology company, today announced financial results for
the first quarter ended March 31, 2023.
“In the first quarter, we made important progress on our
strategic initiatives and saw strength in our new business growth.
This new business performance, including signing our largest ever
new business deal with a leading global media company, helps
demonstrate the long-term opportunity ahead for Brightcove.
However, certain near-term revenue challenges, including
lengthening sales cycles and lower overages and entitlement
commitments, are driving the need for us to take meaningful steps
to improve our cost structure to ensure we operate the business
efficiently and achieve our full year profitability targets,” said
Marc DeBevoise, Brightcove’s Chief Executive Officer.
DeBevoise added, “We believe the challenges we are facing are
short-term and primarily impacted by recent economic uncertainty.
We remain confident that our strategic plan, combined with these
changes, will enable us to achieve our long-term financial
goals."
First Quarter 2023 Financial Highlights:
- Revenue for the first quarter of 2023 was $49.1 million,
a decrease of 8% compared to $53.4 million for the first quarter of
2022. Subscription and support revenue was $47.1 million, a
decrease of 9% compared to $51.6 million for the first quarter of
2022.
- Gross profit for the first quarter of 2023 was $28.8
million, representing a gross margin of 59%, compared to a gross
profit of $34.4 million, representing a gross margin of 64% for the
first quarter of 2022. Non-GAAP gross profit for the first quarter
of 2023 was $29.6 million, representing a non-GAAP gross margin of
60%, compared to a non-GAAP gross profit of $35.0 million,
representing a non-GAAP gross margin of 66% for the first quarter
of 2022. 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 $10.7 million for the first
quarter of 2023, compared to loss from operations of $2.0 million
for the first quarter of 2022. Non-GAAP operating loss, which
excludes stock-based compensation expense, the amortization of
acquired intangible assets, merger-related and restructuring
expenses and other (benefit) expense, was $5.6 million for the
first quarter of 2023, compared to non-GAAP operating income of
$3.8 million during the first quarter of 2022.
- Net loss was $11.7 million, or a loss of $0.28 per
diluted share, for the first quarter of 2023. This compares to a
net loss of $1.6 million, or $0.04 per diluted share, for the first
quarter of 2022. Non-GAAP net loss, which excludes stock-based
compensation expense, the amortization of acquired intangible
assets, merger-related and restructuring expenses and other
(benefit) expense, was $6.6 million for the first quarter of 2023,
or a loss of $0.15 per diluted share, compared to non-GAAP net
income of $4.2 million for the first quarter of 2022, or $0.10 per
diluted share.
- Adjusted EBITDA was negative $2.7 million for the first
quarter of 2023, compared to adjusted EBITDA of $5.1 million for
the first quarter of 2022. Adjusted EBITDA excludes stock-based
compensation expense, merger-related and restructuring expenses,
other (benefit) expense, the amortization of acquired intangible
assets, depreciation expense, other income/expense and the
provision for income taxes.
- Cash flow used by operations was $12.6 million for the
first quarter of 2023, compared to cash flow used by operations of
$690,000 for the first quarter of 2022.
- Free cash flow was negative $17.5 million after the
company invested $4.9 million in capital expenditures and
capitalization of internal-use software during the first quarter of
2023. Free cash flow was negative $5.5 million for the first
quarter of 2022.
- Cash and cash equivalents were $12.5 million as of March
31, 2023 compared to $31.9 million on December 31, 2022. The low
cash balance was driven by the collapse of Silicon Valley Bank
(SVB) on March 10, 2023, which meaningfully delayed the timing of
cash collections at the end of the quarter while we directed
customers to make payments to another financial institution. As of
May 3, 2023, the majority of this cash has already been
collected.
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 First Quarter and Recent Highlights/Updates:
- New business was a record-high in the first quarter, up 325%
YoY, driven by the largest new business deal in our history.
Excluding that deal, new business was up 35% YoY. Notable new
customers signed in the first quarter include, A24 Films,
Blackdoctor.org, Broadcom, Harvest Ministries, LeMaitre, One 31 and
The Capra Project.
- Notable customers who renewed or expanded their relationship
with Brightcove during the first quarter include: American Academy
of Orthopedic Surgeons, Audacy, BouncTV, Dell, Express Scripts,
Forbes Media, Harley Davidson, Herbalife, Little League Baseball,
Merck, Motorola Solutions, Nikon Instruments, Phillips Auctioneers,
SkyWest Airlines, The 33rd Team and TVB USA.
- Net revenue retention in the quarter was 94%, which compares to
94% in the fourth quarter of 2022 and 98% in the first quarter of
2022.
- Recurring dollar retention rate was 88% in the first quarter of
2023, versus our historical target of the low to mid-90 percent
range.
- 12-month Backlog (which we define as the aggregate amount of
committed subscription revenue related to future performance
obligations in the next 12 months) was $129.3 million. This
represents a slight year-over-year increase over $128.7 million at
the end of the first quarter of 2022. Total backlog was $181.3
million, a 14% increase year-over-year over $159.2 million at the
end of the first quarter 2022. The strength in total backlog was
driven by a higher percentage of multi-year bookings, including the
large media win referenced earlier.
- Average annual subscription revenue per premium customer was
$89,400 in the first quarter of 2023, excluding starter customers
who had average annualized revenue of $3,900 per customer. The
average annual subscription revenue per premium customer compares
to $96,500 in the first quarter of 2022.
- Ended the first quarter of 2023 with 2,739 customers, of which
2,180 were premium.
- Launched Brightcove Ad Monetization, a new advertising
monetization service for media companies to generate additional
revenue from their advertising strategy. Brightcove Ad Monetization
helps media companies maximize measurable returns on advertising
with actionable insights and supports the monetization of live and
video-on-demand (VOD) content with improved yield optimization to
fill unsold ad inventory and increase revenue.
- Entered into a partnership with Frequency, a cloud-based video
platform powering linear channel creation for content providers. As
a leader in free ad-supported streaming TV (FAST) channel
solutions, Frequency’s integration into Brightcove’s award-winning
video platform allows customers to seamlessly create, launch and
manage linear FAST channels to expand their reach and increase
their revenue.
- Launched Brightcove Communications Studio, our video-first
solution purpose-built for HR and communications
professionals.
- Launched Enterprise-focused eCommerce integrations with
Shopify, Salesforce Sales Cloud and Instagram that allow our
customers to distribute and analyze video across each of these
leading platforms to drive leads or revenue.
Business Outlook:
Based on information as of today, May 3, 2023, the Company is
issuing the following business updates and financial guidance
Second Quarter 2023 Business Update:
- On April 28, 2023, the Board of Directors of Brightcove
authorized a restructuring that is designed to reduce operating
costs, improve operating margins and focus on key growth and
strategic priorities. The restructuring includes a reduction of the
company’s workforce by approximately 10%. We expect the
restructuring will result in over $10M of savings for 2023 and over
$13M in savings on an annual run-rate basis. The Company estimates
that it will incur charges of approximately $2.0 million related to
employee severance costs and intends to exclude these charges from
its non-GAAP financial measures, including 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.
- On May 1, 2023, Brightcove terminated its Sales Agreement with
Cowen and Company LLC related to the ATM offering filed in
conjunction with our 10K filing in February 2023. Brightcove
previously announced that, in light of current market conditions,
Brightcove did not intend to make sales under the ATM Program and
suspended the ATM Program. Brightcove ultimately determined to
exercise its option to terminate the Sales Agreement due to such
conditions. Through the Termination Date, Brightcove made no sales
under the ATM Program.
Second Quarter 2023 Guidance:
- Revenue is expected to be in the range of $50.0 million
to $51.0 million, including approximately $2.1 million of
professional services revenue and $1.0 million of overages.
- Non-GAAP loss from operations is expected to be in the
range of ($1.3) million to ($0.3) million, which excludes
stock-based compensation of approximately $3.4 million, the
amortization of acquired intangible assets of approximately $1.0
million, and restructuring expense of approximately $2.0
million.
- Adjusted EBITDA is expected to be in the range of $1.8
million to $2.8 million, which excludes stock-based compensation of
approximately $3.4 million, the amortization of acquired intangible
assets of approximately $1.0 million, restructuring expense of
approximately $2.0 million, depreciation expense of approximately
$3.0 million, and other (income) expense and the provision for
income taxes of approximately $0.3 million.
- Non-GAAP net loss per diluted share is expected to be
($0.04) to ($0.01), which excludes stock-based compensation of
approximately $3.4 million, the amortization of acquired intangible
assets of approximately $1.0 million, restructuring expense of
approximately $2.0 million, and assumes approximately 43.1 million
weighted-average shares outstanding.
Full Year 2023 Guidance:
- Revenue is expected to be in the range of $204.0 million
to $209.0 million, including approximately $8.8 million of
professional services revenue and $4.4 million of overages.
- Non-GAAP income from operations is expected to be in the
range of $3.0 million to $6.0 million, which excludes stock-based
compensation of approximately $13.9 million, the amortization of
acquired intangible assets of approximately $4.1 million,
merger-related expense of approximately $0.1 million, and
restructuring expense of $2.4 million.
- Adjusted EBITDA is expected to be in the range of $16.0
million to $19.0 million, which excludes stock-based compensation
of approximately $13.9 million, the amortization of acquired
intangible assets of approximately $4.1 million, merger-related
expense of approximately $0.1 million, restructuring expense of
$2.4 million, depreciation expense of approximately $13.2 million,
and other (income) expense and the provision for income taxes of
approximately $1.8 million.
- Non-GAAP earnings per diluted share is expected to be
$0.03 to $0.10, which excludes stock-based compensation of
approximately $13.9 million, the amortization of acquired
intangible assets of approximately $4.1 million, merger-related
expense of approximately $0.1 million, restructuring expense of
$2.4 million, and assumes approximately 43.4 million
weighted-average shares outstanding.
Earnings Stream Information:
Brightcove earnings will be streamed on May 3, 2023, at 5:00
p.m. (Eastern Time) to discuss the Company's financial results and
current business outlook. To access the live stream, visit the
“Investors” page of the Company’s website,
http://investor.brightcove.com. Once the live stream concludes, an
on-demand recording will be available on Brightcove’s Investor page
for a limited time at http://investor.brightcove.com.
About Brightcove Inc. (NASDAQ: BCOV)
Brightcove creates the world’s most reliable, scalable, and
secure streaming technology solutions to build a greater connection
between companies and their audiences, no matter where they are or
on which devices they consume content. In more than 60 countries,
Brightcove’s intelligent video platform enables businesses to sell
to customers more effectively, media leaders to stream and monetize
content more reliably, and every organization to communicate with
team members more powerfully. With two Technology and Engineering
Emmy® Awards for innovation, uptime that consistently leads the
industry, and unmatched scalability, we continuously push the
boundaries of what video can do. Follow Brightcove on Twitter,
LinkedIn, and Facebook. 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 second fiscal quarter and full year 2023, our position to
execute on our growth strategy, the effects of our restructuring
efforts, and our ability to expand our leadership position and
market opportunity. 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: the effect of the
COVID-19 pandemic, including on our business operations and broader
conditions, as well as its impact on the general economic and
financial market conditions; our ability to retain existing
customers and acquire new ones; our history of losses; 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; keeping
up with the rapid technological change required to remain
competitive in our industry; our ability to manage our growth
effectively and successfully recruit additional highly-qualified
personnel; our reduction in force, including risks that the related
costs and charges may be greater than anticipated and that the
restructuring efforts may not generate their intended benefits, may
adversely affect the Company’s internal programs and the Company’s
ability to recruit and train skilled and motivated personnel, and
may be distracting to employees and management; 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 and similar disclosures in our subsequent filings with
the SEC. 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, non-GAAP diluted net income (loss) per share, and revenue
and adjusted EBITDA on a constant currency basis. 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, amortization of acquired
intangible assets, merger-related and restructuring expenses,
restructuring and other (benefit) expense. The non-GAAP financial
results discussed above of adjusted EBITDA is defined as
consolidated net income (loss), plus other income/expense,
including interest expense and interest income, the provision for
income taxes, depreciation expense, the amortization of acquired
intangible assets, stock-based compensation expense, merger-related
and restructuring expenses, restructuring and other (benefit)
expense. Merger-related expenses include fees incurred in
connection with an acquisition and restructuring expenses include
primarily cash severance costs. Revenue and adjusted EBITDA on a
constant currency basis reflect our revenues and adjusted EBITDA
using exchange rates used for Brightcove’s Fiscal Year 2023 outlook
on Brightcove’s press release on February 23, 2023. 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)
March 31, 2023 December 31, 2022
Assets Current assets:
Cash and cash equivalents
$
12,478
$
31,894
Accounts receivable, net of allowance
40,623
26,004
Prepaid expenses and other current assets
21,299
19,422
Total current assets
74,400
77,320
Property and equipment, net
42,155
39,677
Operating lease right-of-use asset
18,025
18,671
Intangible assets, net
9,261
10,279
Goodwill
74,859
74,859
Other assets
6,750
7,007
Total assets
$
225,450
$
227,813
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$
13,014
$
11,326
Accrued expenses
21,692
26,877
Operating lease liability
4,218
4,157
Deferred revenue
71,537
61,597
Total current liabilities
110,461
103,957
Operating lease liability, net of current portion
19,740
20,528
Other liabilities
959
981
Total liabilities
131,160
125,466
Stockholders' equity:
Common stock
43
42
Additional paid-in capital
318,293
314,825
Treasury stock, at cost
(871
)
(871
)
Accumulated other comprehensive loss
(1,405
)
(1,593
)
Accumulated deficit
(221,770
)
(210,056
)
Total stockholders’ equity
94,290
102,347
Total liabilities and stockholders' equity
$
225,450
$
227,813
Brightcove Inc. Condensed Consolidated Statements
of Operations (in thousands, except per share amounts)
Three Months Ended March 31,
2023
2022
Revenue: Subscription and support revenue
$
47,102
$
51,601
Professional services and other revenue
1,961
1,778
Total revenue
49,063
53,379
Cost of revenue: (1) (2) Cost of subscription and support
revenue
18,265
16,982
Cost of professional services and other revenue
2,002
1,998
Total cost of revenue
20,267
18,980
Gross profit
28,796
34,399
Operating expenses: (1) (2) Research and development
9,866
8,237
Sales and marketing
19,465
18,288
General and administrative
10,064
8,089
Merger-related
145
594
Other expense
-
1,149
Total operating expenses
39,540
36,357
Loss from operations
(10,744
)
(1,958
)
Other expense, net
(543
)
(387
)
Loss before income taxes
(11,287
)
(2,345
)
Loss (benefit) from provision for income taxes
427
(708
)
Net loss
$
(11,714
)
$
(1,637
)
Net loss per share—basic and diluted Basic
$
(0.28
)
$
(0.04
)
Diluted
(0.28
)
(0.04
)
Weighted-average shares—basic and diluted
Basic
42,528
41,436
Diluted
42,528
41,436
(1) Stock-based compensation included in above line
items: Cost of subscription and support revenue
$
138
$
109
Cost of professional services and other revenue
100
119
Research and development
688
722
Sales and marketing
1,169
943
General and administrative
1,448
1,337
Other expense
-
249
(2) Amortization of acquired intangible assets
included in the above line items: Cost of subscription and
support revenue
$
601
$
404
Sales and marketing
416
413
Brightcove Inc. Condensed Consolidated Statements of Cash
Flows (in thousands) Three
Months Ended March 31, Operating activities
2023
2022
Net loss
$
(11,714
)
$
(1,637
)
Adjustments to reconcile net loss to net cash used in operating
activities: Depreciation and amortization
3,949
2,061
Stock-based compensation
3,543
3,479
Provision for reserves on accounts receivable
67
106
Changes in assets and liabilities: Accounts receivable
(14,713
)
(3,802
)
Prepaid expenses and other current assets
(986
)
(1,550
)
Other assets
314
54
Accounts payable
956
347
Accrued expenses
(3,999
)
(1,980
)
Operating leases
(81
)
705
Deferred revenue
10,032
1,527
Net cash used in operating activities
(12,632
)
(690
)
Investing activities Cash paid for
acquisition, net of cash acquired
-
(13,176
)
Purchases of property and equipment, net of returns
(952
)
(1,884
)
Capitalization of internal-use software costs
(3,930
)
(2,882
)
Net cash used in investing activities
(4,882
)
(17,942
)
Financing activities Proceeds from
exercise of stock options
-
100
Deferred acquisition payments
(1,700
)
-
Other financing activities
(225
)
-
Net cash (used in) provided by financing activities
(1,925
)
100
Effect of exchange rate changes on cash and cash
equivalents
23
(502
)
Net decrease in cash and cash equivalents
(19,416
)
(19,034
)
Cash and cash equivalents at beginning of period
31,894
45,739
Cash and cash equivalents at end of period
$
12,478
$
26,705
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 March
31,
2023
2022
GROSS PROFIT: GAAP gross profit
$
28,796
$
34,399
Stock-based compensation expense
238
228
Amortization of acquired intangible assets
601
404
Restructuring
-
-
Non-GAAP gross profit
$
29,635
$
35,031
(LOSS) INCOME FROM OPERATIONS: GAAP loss from operations
$
(10,744
)
$
(1,958
)
Stock-based compensation expense
3,543
3,230
Amortization of acquired intangible assets
1,017
817
Merger-related
145
594
Restructuring
427
-
Other expense
-
1,149
Non-GAAP (loss) income from operations
$
(5,612
)
$
3,832
NET (LOSS) INCOME: GAAP net loss
$
(11,714
)
$
(1,637
)
Stock-based compensation expense
3,543
3,230
Amortization of acquired intangible assets
1,017
817
Merger-related
145
594
Restructuring
427
-
Other expense
-
1,149
Non-GAAP net (loss) income
$
(6,582
)
$
4,153
GAAP diluted net loss per share
$
(0.28
)
$
(0.04
)
Non-GAAP diluted net (loss) income per share
$
(0.15
)
$
0.10
Shares used in computing GAAP diluted net loss per
share
42,528
41,436
Shares used in computing Non-GAAP diluted net income per share
42,528
41,852
Brightcove Inc. Calculation of Adjusted EBITDA (in
thousands) Three Months Ended March 31,
2023
2022
Net loss
$
(11,714
)
$
(1,637
)
Other expense, net
543
387
Loss (benefit) from income taxes
427
(708
)
Depreciation and amortization
3,949
2,061
Stock-based compensation expense
3,543
3,230
Merger-related
145
594
Restructuring
427
-
Other expense
-
1,149
Adjusted EBITDA
$
(2,680
)
$
5,076
Brightcove Inc. Reconciliation of Revenue on a Constant
Currency Basis and Calculation of Adjusted EBITDA on a Constant
Currency Basis (in thousands)
Three Months Ended March
31,
2023
Total revenue
$
49,063
Constant currency adjustment
(144
)
Total revenue on a constant currency basis
$
48,919
Three Months
Ended March 31,
2023
Adjusted EBITDA
$
(2,680
)
Constant currency adjustment
(32
)
Adjusted EBITDA on a constant currency basis
$
(2,712
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005736/en/
Investors: ICR for Brightcove Brian Denyeau, 646-277-1251
brian.denyeau@icrinc.com or Media: Brightcove Sara Griggs,
929-888-4866 sgriggs@brightcove.com
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