BOSTON, MA (May 4, 2017) - Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the first quarter ended March 31, 2017.
“Brightcove reported mixed first quarter financial results with revenue in line with expectations but non-GAAP EPS below guidance primarily due to a revenue mix shift and unanticipated one-time costs associated with a large client’s impending OTT service launch,” said David Mendels, Chief Executive Officer of Brightcove. “In addition, while we had strong year-over-year bookings performance in the quarter, we experienced a significant and unanticipated decrease in our revenue retention rate, among media customers, primarily due to changes in the market for the non-software elements of content delivery and storage.”
Mendels added, “Despite this challenge, we are optimistic that we will return to double-digit revenue growth in 2018, as we benefit from the positive impact from our bookings momentum and execute on a multi-faceted product and pricing strategy that will improve our revenue retention rate. We believe we are at the early stages of a multi-billion market opportunity with media and digital marketing and enterprise customers who are finding new and innovative ways to leverage their digital assets to improve business performance. We remain confident in our ability to achieve our long-term financial objectives, which we believe will create significant value for long-term shareholders.”
First Quarter 2017 Financial Highlights:
- Revenue for the first quarter of 2017 was $37.6 million, an increase of 4% compared to $36.3 million for the first quarter of 2016. Subscription and support revenue was $34.2 million, compared to $34.7 million for the first quarter of 2016.
- Gross profit for the first quarter of 2017 was $22.4 million, representing a gross margin of 59%, compared to a gross profit of $23.0 million for the first quarter of 2016. Non-GAAP gross profit for the first quarter of 2017 was $23.0 million, representing a non-GAAP gross margin of 61%, compared to a non-GAAP gross profit of $23.6 million for the first 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 $5.1 million for the first quarter of 2017, compared to a loss from operations of $1.5 million for the first quarter of 2016. Non-GAAP loss from operations, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $2.6 million for the first quarter of 2017, compared to non-GAAP income from operations of $714,000 during the first quarter of 2016.
- Net loss was $5.1 million, or $0.15 per diluted share, for the first quarter of 2017. This compares to a net loss of $1.6 million, or $0.05 per diluted share, for the first quarter of 2016. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets and merger-related expenses, was $2.6 million for the first quarter of 2017, or $0.08 per diluted share, compared to non-GAAP net income of $638,000 for the first quarter of 2016, or $0.02 per diluted share.
- Adjusted EBITDA loss was $1.6 million for the first quarter of 2017, compared to adjusted EBITDA of $2.0 million for the first quarter of 2016. Adjusted EBITDA excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expenses, depreciation expense, other income/expense and the provision for income taxes.
- Cash flow used in operations was $6.6 million for the first quarter for 2017, compared to cash flow from operations of $3.0 million for the first quarter of 2016.
- Free cash flow was negative $7.6 million after the company invested $1.0 million in capital expenditures and capitalization of internal-use software during the first quarter of 2017. Free cash flow was $1.3 million for the first quarter of 2016.
- Cash and cash equivalents were $29.2 million as of March 31, 2017 compared to $36.8 million at December 31, 2016.
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:
- Average annual subscription revenue per premium customer was $67,000 in the first quarter of 2017, excluding starter customers who had average annualized revenue of $4,800 per customer. This compares to $69,000 in the comparable period in 2016.
- Recurring dollar retention rate was 85% in the first quarter of 2017, which was below our historical target of the low to mid 90% range.
- Ended the quarter with 4,411 customers, of which 2,021 were premium.
- New digital marketing customers and digital marketing customers who expanded their relationship during the quarter included: Allianz Global Investors, Daimler Trucks North America, Hitachi High-Tech Solutions Corporation, Kyocera Document Solutions, Macy’s Inc., Morningstar Inc., Salomon, and TD Bank, among others.
- New media customers and media customers who expanded their relationship during the quarter included: Conde Nast Japan, Discovery Network Asia, News UK, New York Post, Total Sports Asia, TV Tokyo Communications Corporation, and Young Hollywood, among others.
- Launched Brightcove Live, an API-driven platform that augments scalable live streaming with server-side ad insertion, cloud DVR, content encryption, on-the-fly clipping and seamless VOD asset creation. Brightcove Live benefits media companies by allowing them to deliver and monetize broadcast-like experiences for live events and 24/7 channels while reducing the cost and complexity of live streaming.
- Added Diane Hessan to its board of directors. Diane is currently the Chairman of C Space, an innovative market research company, and previously served as the company’s CEO for 13 years prior to its acquisition by Omnicom in 2011. Diane has also served on numerous other boards, including Panera, Eastern Bank, Beth Israel Deaconess Medical Center, Mass Challenge and Tufts University. She received her B.A. in Economics from Tufts University and her M.B.A. from Harvard Business School.
Business Outlook
Based on information as of today, May 4, 2017, the Company is issuing the following financial guidance:
Second Quarter 2017:
- Revenue is expected to be in the range of $37.0 million to $37.8 million, including approximately $2.5 million of professional services revenue.
- Non-GAAP loss from operations is expected to be in the range of $4.2 million to $5.0 million, which excludes stock-based compensation of approximately $1.6 million and the amortization of acquired intangible assets of approximately $700,000.
- Adjusted EBITDA loss is expected to be in the range of $3.0 million to $3.8 million, which excludes stock-based compensation of approximately $1.6 million, the amortization of acquired intangible assets of approximately $700,000, depreciation expense of approximately $1.2 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 $0.13 to $0.15, which excludes stock-based compensation of approximately $1.6 million and the amortization of acquired intangible assets of approximately $700,000, and assumes approximately 34.2 million weighted-average shares outstanding.
Full Year 2017:
- Revenue is expected to be in the range of $151.0 million to $155.0 million. Professional services is expected to be in a range of $10.0 million to $11.0 million.
- Non-GAAP loss from operations is expected to be in the range of $6.0 million to $9.0 million, which excludes stock-based compensation of approximately $7.3 million and the amortization of acquired intangible assets of approximately $2.7 million.
- Adjusted EBITDA loss is expected to be in the range of $1.5 million to $4.5 million, which excludes stock-based compensation of approximately $7.3 million, the amortization of acquired intangible assets of approximately $2.7 million, depreciation expense of approximately $4.5 million and other income/expense and the provision for income taxes of approximately $400,000.
- Non-GAAP net loss per diluted share is expected to be $0.19 to $0.28, which excludes stock-based compensation of approximately $7.3 million and the amortization of acquired intangible assets of approximately $2.7 million, and assumes approximately 34.3 million weighted-average shares outstanding.
Conference Call Information
Brightcove will host a conference call today, May 4, 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 855-327-6837 (domestic) or 631-891-4304 (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 10002855. 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 second fiscal quarter of 2017 and full year 2017, our position to execute on our growth 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 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.
Investor Contact:
Brian Denyeau
ICR for Brightcove
brian.denyeau@icrinc.com
646-277-1251
Media Contact:
Phil LeClare
Brightcove, Inc
pleclare@brightcove.com
617-674-6510