Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud
services for video, today announced financial results for the third
quarter ended September 30, 2017.
“Brightcove is pleased to deliver strong third quarter results
that exceeded expectations from both a financial and operational
perspective. Over the last few months we have made significant
progress executing on our go-to-market strategy and improving the
efficiency of our day-to-day operations,” said Andrew Feinberg,
Acting Chief Executive Officer of Brightcove.
Feinberg added, “We are seeing exciting customer interest in our
latest products, such as Dynamic Delivery, Context Aware Encoding
and our new Enterprise Video Suite. Customers are using these
products to solve some of the most mission-critical issues facing
their businesses and they are quickly realizing the significant
value Brightcove can deliver. We believe the strength of our
product portfolio and our enhanced go-to-market strategy puts
Brightcove in a strong position to capitalize on our market
opportunities.”
Third Quarter 2017 Financial Highlights:
- Revenue for the third quarter of
2017 was $39.5 million, an increase from $38.4 million for the
third quarter of 2016. Subscription and support revenue was $36.5
million, compared to $36.2 million for the third quarter of
2016.
- Gross profit for the third
quarter of 2017 was $23.0 million, representing a gross margin of
58%, compared to a gross profit of $24.6 million for the third
quarter of 2016. Non-GAAP gross profit for the third quarter of
2017 was $23.7 million, representing a non-GAAP gross margin of
60%, compared to a non-GAAP gross profit of $25.3 million for the
third 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 $5.3
million for the third quarter of 2017, compared to a loss from
operations of $1.6 million for the third quarter of 2016. Non-GAAP
loss from operations, which excludes stock-based compensation
expense, the amortization of acquired intangible assets, executive
severance and merger-related expenses, was $2.2 million for the
third quarter of 2017, compared to non-GAAP operating income of
$913,000 during the third quarter of 2016.
- Net loss was $5.4 million, or
$0.16 per diluted share, for the third quarter of 2017. This
compares to a net loss of $1.6 million, or $0.05 per diluted share,
for the third quarter of 2016. Non-GAAP net loss, which excludes
stock-based compensation expense, the amortization of acquired
intangible assets, executive severance and merger-related expenses,
was $2.2 million for the third quarter of 2017, or $0.06 per
diluted share, compared to non-GAAP net income of $847,000 for the
third quarter of 2016, or $0.02 per diluted share.
- Adjusted EBITDA loss was
$889,000 for the third quarter of 2017, compared to adjusted EBITDA
of $2.0 million for the third quarter of 2016. Adjusted EBITDA
excludes stock-based compensation expense, the amortization of
acquired intangible assets, merger-related expenses, depreciation
expense, executive severance, other income/expense, and the
provision for income taxes.
- Cash flow used in operations was
$4.9 million for the third quarter for 2017, compared to cash flow
from operations of $2.6 million for the third quarter of 2016.
- Free cash flow was negative $6.2
million after the company invested $1.3 million in capital
expenditures and capitalization of internal-use software during the
third quarter of 2017. Free cash flow was $1.2 million for the
third quarter of 2016.
- Cash and cash equivalents were
$22.1 million as of September 30, 2017 compared to $28.4 million at
June 30, 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 Third Quarter and Recent Highlights:
- Average annual subscription revenue per
premium customer was $73,000 in the third 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 95%
in the third quarter of 2017, which was in-line with our historical
target of the low to mid 90% range.
- Ended the quarter with 4,210 customers,
of which 2,113 were premium.
- New enterprise customers and enterprise
customers who expanded their relationship during the quarter
included: American Express Global Business Travel, Bristol-Myers
Squibb, Edmunds.com, GameStop, Hallmark Cards, Mary Kay Cosmetics,
NetApp, among others.
- New media customers and media customers
who expanded their relationship during the quarter included: BBC
Worldwide, Lionsgate, McClatchy, Premier League Football,
Prometheus Global, the publisher of Billboard and Hollywood
Reporter, Reelz Channel, UK TV, and Young Hollywood, among
others.
- Foxtel partnered with Brightcove to
livestream the Floyd Mayweather vs. Conor McGregor fight on August
27, 2017.
Business Outlook
Based on information as of today, October 26, 2017, the Company
is issuing the following financial guidance:
Fourth Quarter 2017:
- Revenue is expected to be in the
range of $39.3 million to $39.8 million, including approximately
$2.8 million of professional services revenue.
- Non-GAAP loss from operations is
expected to be in the range of $600,000 to $1.1 million, which
excludes stock-based compensation of approximately $1.8 million and
the amortization of acquired intangible assets of approximately
$700,000.
- Adjusted EBITDA is expected to
be in the range of breakeven to $500,000, which excludes
stock-based compensation of approximately $1.8 million, the
amortization of acquired intangible assets of approximately
$700,000, depreciation expense of approximately $1.1 million and
other income/expense and the provision for income taxes of
approximately $50,000.
- Non-GAAP net loss per diluted
share is expected to be $0.02 to $0.03, which excludes
stock-based compensation of approximately $1.8 million and the
amortization of acquired intangible assets of approximately
$700,000, and assumes approximately 34.7 million weighted-average
shares outstanding.
Full Year 2017:
- Revenue is expected to be in the
range of $155.1 million to $155.6 million. Professional services
revenue is expected to be approximately $12.3 million.
- Non-GAAP loss from operations is
expected to be in the range of $10.9 million to $11.4 million,
which excludes stock-based compensation of approximately $7.1
million, the amortization of acquired intangible assets of
approximately $2.7 million and executive severance of approximately
$700,000.
- Adjusted EBITDA loss is expected
to be in the range of $6.3 million to $6.8 million, which excludes
stock-based compensation of approximately $7.1 million, the
amortization of acquired intangible assets of approximately $2.7
million, depreciation expense of approximately $4.6 million,
executive severance of approximately $700,000, and other
income/expense and the provision for income taxes of approximately
$200,000.
- Non-GAAP net loss per diluted
share is expected to be $0.31 to $0.33, which excludes
stock-based compensation of approximately $7.1 million, the
amortization of acquired intangible assets of approximately $2.7
million, and executive severance of approximately $700,000, and
assumes approximately 34.4 million weighted-average shares
outstanding.
Conference Call Information
Brightcove will host a conference call today, October 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 13672188. 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 fourth fiscal quarter of 2017 and full year 2017, our position
to execute on our go-to-market strategy, 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: our history of losses; our
limited operating history; 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 manage our growth effectively and
successfully recruit additional highly-qualified personnel; 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, executive severance 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, executive
severance, 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. Executive severance represents severance paid to the
former CEO of the Company. 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)
September 30, 2017 December 31, 2016 Assets
Current assets: Cash and cash equivalents $ 22,056 $ 36,813
Accounts receivable, net of allowance 26,296 21,575 Prepaid
expenses and other current assets 7,112 5,897
Total current assets 55,464 64,285 Property and equipment,
net 9,005 9,264 Intangible assets, net 8,910 10,970 Goodwill 50,776
50,776 Deferred tax asset 123 121 Other assets 931
1,008 Total assets $ 125,209 $ 136,424
Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 6,635 $ 5,327 Accrued expenses 13,319 15,705
Capital lease liability 334 489 Equipment financing 104 307
Deferred revenue 37,376 34,665 Total
current liabilities 57,768 56,493 Deferred revenue, net of current
portion 166 91 Other liabilities 1,253 1,644
Total liabilities 59,187 58,228 Stockholders' equity:
Common stock 35 34 Additional paid-in capital 236,628 230,788
Treasury stock, at cost (871 ) (871 ) Accumulated other
comprehensive loss (843 ) (1,172 ) Accumulated deficit
(168,927 ) (150,583 ) Total stockholders’ equity
66,022 78,196 Total liabilities and
stockholders' equity $ 125,209 $ 136,424
Brightcove Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share amounts)
Three Months Ended September 30, Nine
Months Ended September 30, 2017
2016 2017 2016
Revenue: Subscription and support revenue $ 36,496 $ 36,203
$ 106,266 $ 105,936 Professional services and other revenue
2,991 2,186 9,546 5,705
Total revenue 39,487 38,389 115,812 111,641 Cost of revenue:
(1) (2) Cost of subscription and support revenue 12,924 11,691
38,180 35,041 Cost of professional services and other revenue
3,580 2,086 10,120
5,453 Total cost of revenue 16,504
13,777 48,300 40,494 Gross
profit 22,983 24,612 67,512
71,147 Operating expenses: (1) (2) Research
and development 7,820 7,704 24,293 22,385 Sales and marketing
14,551 13,334 44,356 39,845 General and administrative 5,961 5,126
17,228 14,190 Merger-related - -
- 21 Total operating expenses 28,332
26,164 85,877 76,441
Loss from operations (5,349 ) (1,552 ) (18,365 ) (5,294 )
Other income (expense), net 71 (5 ) 523
(127 ) Net loss before income taxes (5,278 ) (1,557 )
(17,842 ) (5,421 ) Provision for income taxes 118
61 305 202 Net loss $
(5,396 ) $ (1,618 ) $ (18,147 ) $ (5,623 ) Net loss per
share—basic and diluted $ (0.16 ) $ (0.05 ) $ (0.53 ) $ (0.17 )
Weighted-average shares—basic and diluted 34,501 33,345
34,270 32,956 (1) Stock-based compensation included in above
line items: Cost of subscription and support revenue $ 117 $ 94 $
308 $ 204 Cost of professional services and other revenue 70 69 189
158 Research and development 384 372 1,132 942 Sales and marketing
690 651 1,953 1,630 General and administrative 557 495 1,712 1,331
(2) Amortization of acquired intangible assets
included in the above line items: Cost of subscription and support
revenue $ 508 $ 507 $ 1,523 $ 1,523 Research and development - 32
11 95 Sales and marketing 166 245 525 715
Brightcove Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
Nine Months Ended September 30, Operating
activities 2017 2016 Net loss $ (18,147 ) $
(5,623 ) Adjustments to reconcile net loss to net cash (used in)
provided by operating activities: Depreciation and amortization
5,607 5,901 Stock-based compensation 5,294 4,265 Provision for
reserves on accounts receivable 152 233 Changes in assets and
liabilities: Accounts receivable (4,816 ) (1,441 ) Prepaid expenses
and other current assets (1,660 ) (1,720 ) Other assets 94 (200 )
Accounts payable 2,021 (17 ) Accrued expenses (2,874 ) 1,953
Deferred revenue 2,677 4,278 Net cash
(used in) provided by operating activities (11,652 )
7,629
Investing activities Cash paid for
purchase of intangible asset - (300 ) Purchases of property and
equipment, net of returns (990 ) (1,194 ) Capitalization of
internal-use software costs (2,091 ) (2,940 ) Net
cash used in investing activities (3,081 ) (4,434 )
Financing activities Proceeds from exercise of stock
options 379 4,392 Payments of withholding tax on RSU vesting (175 )
(216 ) Proceeds from equipment financing - 604 Payments on
equipment financing (229 ) (196 ) Payments under capital lease
obligation (383 ) (682 ) Net cash (used in) provided
by financing activities (408 ) 3,902
Effect of exchange rate changes on cash and cash equivalents
384 458 Net (decrease) increase in cash
and cash equivalents (14,757 ) 7,555 Cash and cash equivalents at
beginning of period 36,813 27,637 Cash
and cash equivalents at end of period $ 22,056 $ 35,192
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 September 30, Nine Months Ended September
30, 2017 2016
2017 2016 GROSS PROFIT: GAAP
gross profit $ 22,983 $ 24,612 $ 67,512 $ 71,147 Stock-based
compensation expense 187 163 497 362 Amortization of acquired
intangible assets 508 507 1,523
1,523 Non-GAAP gross profit $ 23,678 $
25,282 $ 69,532 $ 73,032 LOSS FROM OPERATIONS:
GAAP loss from operations $ (5,349 ) $ (1,552 ) $ (18,365 ) $
(5,294 ) Stock-based compensation expense 1,818 1,681 5,294 4,265
Merger-related expenses - - - 21 Amortization of acquired
intangible assets 674 784 2,059 2,333 Executive severance
700 - 700 -
Non-GAAP (loss) income from operations $ (2,157 ) $ 913 $
(10,312 ) $ 1,325 NET LOSS: GAAP net loss $ (5,396 ) $
(1,618 ) $ (18,147 ) $ (5,623 ) Stock-based compensation expense
1,818 1,681 5,294 4,265 Merger-related expenses - - - 21
Amortization of acquired intangible assets 674 784 2,059 2,333
Executive severance 700 - 700
- Non-GAAP net (loss) income $ (2,204 ) $ 847
$ (10,094 ) $ 996 GAAP diluted net loss per share $
(0.16 ) $ (0.05 ) $ (0.53 ) $ (0.17 ) Non-GAAP diluted net (loss)
income per share $ (0.06 ) $ 0.02 $ (0.29 ) $ 0.03
Shares used in computing GAAP diluted net loss per share
34,501 33,345 34,270 32,956 Shares used in computing Non-GAAP
diluted net (loss) income per share 34,501 35,554 34,270 34,336
Brightcove Inc. Calculation of Adjusted EBITDA
(in thousands)
Three Months Ended September
30, Nine Months Ended September 30, 2017
2016 2017
2016 Net loss $ (5,396 ) $ (1,618 ) $ (18,147 ) $
(5,623 ) Other (income) expense, net (71 ) 5 (523 ) 127 Provision
for income taxes 118 61 305 202 Merger-related expenses - - - 21
Depreciation and amortization 1,942 1,916 5,607 5,901 Stock-based
compensation expense 1,818 1,681 5,294 4,265 Executive severance
700 - 700 -
Adjusted EBITDA $ (889 ) $ 2,045 $ (6,764 ) $ 4,893
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171026006409/en/
Investor Contact:ICR for BrightcoveBrian Denyeau,
646-277-1251brian.denyeau@icrinc.comorMedia
Contact:Brightcove, IncPhil LeClare,
617-674-6510pleclare@brightcove.com
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