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Brightcove Announces Financial Results for Second Quarter 2015

July 30, 2015 4:06 PM

Company reports adjusted EBITDA of $620,000

BOSTON--(BUSINESS WIRE)-- Brightcove Inc. (Nasdaq: BCOV), a leading global provider of cloud services for video, today announced financial results for the quarter ended June 30, 2015.

“Brightcove reported second quarter results that were in-line with our profitability expectations, while revenue was slightly below expectations due to the timing of certain customer renewals,” said David Mendels, Chief Executive Officer of Brightcove. “We are delivering positive performance in many areas of the company, especially in North America and Japan, though we have seen some softness in our European business. We have taken steps to improve our execution in Europe and believe they will improve results going forward.”

Mendels continued, “From a demand perspective, our digital marketing business is gaining traction, reflecting the significant opportunity for video as part of the cloud marketing automation stack. We are also seeing early interest from Media companies in our ad yield optimization solution that combines Brightcove Perform and Brightcove Once to significantly improve content monetization. We remain confident our strategy can deliver consistent double-digit growth in the future, while also generating strong shareholder value.”

Second Quarter 2015 Financial Highlights:

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:

Business Outlook

Based on information as of today, July 30, 2015, the Company is issuing the following financial guidance:

Third Quarter 2015:

Full Year 2015:

Conference Call Information

Brightcove will host a conference call today, July 30, 2015, at 5:00 p.m. (Eastern Time) to discuss the Company's financial results and current business outlook. 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 877-870-5176 (domestic) or 858-384-5517 (international). The replay conference ID is 13613339. 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 a 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 more than 5,000 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 2015 and full year 2015, 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; 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 loss from operations, non-GAAP net loss, adjusted EBITDA, adjusted EBITDA margin and non-GAAP diluted net 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 loss from operations, non-GAAP net loss and non-GAAP diluted net 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. Adjusted EBITDA margin is defined as adjusted EBITDA as a percentage of total revenue. 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)(unaudited)
June 30, 2015 December 31, 2014
Assets
Current assets:
Cash and cash equivalents $ 21,238 $ 22,916
Accounts receivable, net of allowance 19,235 21,463
Prepaid expenses and other current assets 5,254 4,342
Deferred tax asset 19 109
Total current assets 45,746 48,830
Property and equipment, net 10,598 10,372
Intangible assets, net 15,319 16,898
Goodwill 50,776 50,776
Restricted cash 201 201
Other assets 1,031 507
Total assets $ 123,671 $ 127,584
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,883 $ 1,618
Accrued expenses 9,795 11,722
Capital lease liability 1,080 1,159
Current portion of long-term debt 697 -
Deferred revenue 28,808 29,640
Total current liabilities 43,263 44,139
Deferred revenue, net of current portion 122 64
Other liabilities 3,199 2,618
Total liabilities 46,584 46,821
Stockholders' equity:
Common stock 33 32
Additional-paid-in-capital 217,370 214,524
Accumulated other comprehensive loss (822 ) (776 )
Accumulated deficit (139,494 ) (133,017 )
Total stockholders’ equity 77,087 80,763
Total liabilities and stockholders' equity $ 123,671 $ 127,584
Brightcove Inc.Condensed Consolidated Statements of Operations(in thousands, except per share amounts)(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Revenue:
Subscription and support revenue $ 31,917 $ 29,929 $ 63,728 $ 59,304
Professional services and other revenue 931 1,074 2,005 2,804
Total revenue 32,848 31,003 65,733 62,108
Cost of revenue: (1) (2)
Cost of subscription and support revenue 10,357 9,109 20,703 18,629
Cost of professional services and other revenue 1,201 1,315 2,447 3,062
Total cost of revenue 11,558 10,424 23,150 21,691
Gross profit 21,290 20,579 42,583 40,417
Operating expenses: (1) (2)
Research and development 7,267 6,792 15,087 13,361
Sales and marketing 11,903 12,095 22,742 23,441
General and administrative 5,209 5,148 10,370 9,862
Merger-related 62 521 76 2,388
Total operating expenses 24,441 24,556 48,275 49,052
Loss from operations (3,151 ) (3,977 ) (5,692 ) (8,635 )
Other expense, net (429 ) (294 ) (653 ) (406 )
Loss before income taxes and non-controlling interest in
consolidated subsidiary (3,580 ) (4,271 ) (6,345 ) (9,041 )
Provision for income taxes 66 56 132 123
Net loss $ (3,646 ) $ (4,327 ) $ (6,477 ) $ (9,164 )
Net loss per share—basic and diluted $ (0.11 ) $ (0.13 ) $ (0.20 ) $ (0.29 )
Weighted-average shares —basic and diluted 32,548 32,145 32,522 31,595
(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue $ 51 $ 50 $ 71 $ 110
Cost of professional services and other revenue 19 16 52 68
Research and development 226 178 660 574
Sales and marketing 463 512 921 1,145
General and administrative 577 741 1,085 1,350
(2) Amortization of acquired intangible assets included in the above line items:
Cost of subscription and support revenue $ 508 $ 507 $ 1,015 $ 930
Research and development 31 41 63 72
Sales and marketing 250 316 501 581
Brightcove Inc.Condensed Consolidated Statements of Cash Flows(in thousands)(unaudited)
Six Months Ended June 30,
Operating activities 2015 2014
Net loss $ (6,477 ) $ (9,164 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 4,802 3,958
Stock-based compensation 2,789 3,247
Provision for reserves on accounts receivable 167 41
Amortization of premium on investments - 1
Loss on disposal of equipment 44 91
Changes in assets and liabilities:
Accounts receivable 2,035 2,261
Prepaid expenses and other current assets (878 ) (1,755 )
Other assets (530 ) 1,188
Accounts payable 1,332 (3,177 )
Accrued expenses (2,127 ) (4,416 )
Deferred revenue (726 ) 3,515
Net cash provided by (used in) operating activities 431 (4,210 )
Investing activities
Purchases of property and equipment (2,441 ) (1,487 )
Capitalization of internal-use software costs (336 ) (875 )
Cash paid for acquisition, net of cash acquired - (9,100 )
Maturities of investments - 3,060
Decrease in restricted cash - 113
Net cash used in investing activities (2,777 ) (8,289 )
Financing activities
Proceeds from exercise of stock options 58 555
Proceeds from issuance of debt 1,704 -
Payments on debt (404 ) -
Payments under capital lease obligation (627 ) (524 )
Net cash provided by financing activities 731 31
Effect of exchange rate changes on cash (63 ) 206
Net decrease in cash and cash equivalents (1,678 ) (12,262 )
Cash and cash equivalents at beginning of period 22,916 33,047
Cash and cash equivalents at end of period $ 21,238 $ 20,785
Brightcove Inc.Reconciliation of GAAP Gross Profit, GAAP Loss From Operations, GAAP Net Loss and GAAP Net Loss Per Share toNon-GAAP Gross Profit, Non-GAAP Loss From Operations, Non-GAAP Net Loss and Non-GAAP Net Loss Per Share(in thousands, except per share amounts)(unaudited)
Three Months Ended June 30, Six Months Ended June 30,

2015

2014

2015

2014
GROSS PROFIT:
GAAP gross profit $ 21,290 $ 20,579 $ 42,583 $ 40,417
Stock-based compensation expense 70 66 123 178
Amortization of acquired intangible assets 508 507 1,015 930
Non-GAAP gross profit $ 21,868 $ 21,152 $ 43,721 $ 41,525
LOSS FROM OPERATIONS:
GAAP loss from operations $ (3,151 ) $ (3,977 ) $ (5,692 ) $ (8,635 )
Stock-based compensation expense 1,336 1,497 2,789 3,247
Merger-related expenses 62 521 76 2,388
Amortization of acquired intangible assets 789 864 1,579 1,583
Non-GAAP loss from operations $ (964 ) $ (1,095 ) $ (1,248 ) $ (1,417 )
NET LOSS:
GAAP net loss $ (3,646 ) $ (4,327 ) $ (6,477 ) $ (9,164 )
Stock-based compensation expense 1,336 1,497 2,789 3,247
Merger-related expenses 62 521 76 2,388
Amortization of acquired intangible assets 789 864 1,579 1,583
Non-GAAP net loss attributable to common stockholders $ (1,459 ) $ (1,445 ) $ (2,033 ) $ (1,946 )
GAAP basic and diluted net loss per share $ (0.11 ) $ (0.13 ) $ (0.20 ) $ (0.29 )
Non-GAAP basic and diluted net loss per share $ (0.04 ) $ (0.04 ) $ (0.06 ) $ (0.06 )
Shares used in computing GAAP and Non-GAAP basic and diluted net loss per share 32,548 32,145 32,522 31,595

Brightcove Inc.Calculation of Adjusted EBITDA and Adjusted EBITDA Margin(in thousands)(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014
Net loss $ (3,646 ) $ (4,327 ) $ (6,477 ) $ (9,164 )
Other expense, net (429 ) (294 ) (653 ) (406 )
Provision for income taxes 66 56 132 123
Merger-related expenses 62 521 76 2,388
Depreciation and amortization 2,373 2,132 4,802 3,958
Stock-based compensation expense 1,336 1,497 2,789 3,247
Adjusted EBITDA $ 620 $ 173 $ 1,975 $ 958
Adjusted EBITDA margin 1.9 % 0.6 % 3.0 % 1.5 %

Investor Contact:

ICR for Brightcove

Brian Denyeau, 646-277-1251

[email protected]

or

Media Contact:

Brightcove Inc.

DoShik Wood, 617-299-8453

[email protected]

Source: Brightcove Inc.

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