BOSTON--(BUSINESS WIRE)-- Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the second quarter ended June 30, 2019.

“Brightcove performed well in the second quarter and made meaningful progress on our strategic priorities. We are seeing early, encouraging signs that the tight alignment of our product development roadmap with a revamped go-to-market strategy can drive faster, more predictable growth. This validation of our strategy gives us confidence in our ability to achieve our long-term goals of breakout growth and profitability,” said Jeff Ray, Chief Executive Officer, Brightcove.

Ray continued, “Our targeted market segmentation and specialized sales organization are beginning to yield positive results. In particular, our European team delivered a terrific performance that was the best in years in that region. This is a positive indication of what our strategic investments can drive across the entire company.”

Second Quarter 2019 Financial Highlights:

• Revenue for the second quarter of 2019 was $47.6 million, an increase of 14% compared to $41.7 million for the second quarter of 2018. Subscription and support revenue was $44.9 million, an increase of 19% compared to $37.9 million for the second quarter of 2018.
• Gross profit for the second quarter of 2019 was $26.0 million, representing a gross margin of 55% compared to a gross profit of $25.0 million for the second quarter of 2018. Non-GAAP gross profit for the second quarter of 2019 was $26.8 million, representing a non-GAAP gross margin of 56%, compared to a non-GAAP gross profit of $25.7 million for the second quarter of 2018. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense, executive severance and restructuring expense and the amortization of acquired intangible assets.
• Loss from operations was $7.1 million for the second quarter of 2019, compared to a loss from operations of $5.0 million for the second quarter of 2018. Non-GAAP operating loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $1.5 million for the second quarter of 2019, compared to non-GAAP operating loss of $1.8 million during the second quarter of 2018.
• Net loss was $7.2 million, or $0.19 per diluted share, for the second quarter of 2019. This compares to a net loss of $5.7 million, or $0.16 per diluted share, for the second quarter of 2018. Non-GAAP net loss, which excludes stock-based compensation expense, the amortization of acquired intangible assets, merger-related expense and executive severance and restructuring expense, was $1.6 million for the second quarter of 2019, or $0.04 per diluted share, compared to non-GAAP net loss of $2.4 million for the second quarter of 2018, or $0.07 per diluted share.
• Adjusted EBITDA was negative $130,000 for the second quarter of 2019, compared to adjusted EBITDA of negative $660,000 for the second quarter of 2018. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, executive severance and restructuring expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
• Cash flow used in operations was $4.1 million for the second quarter for 2019, compared to cash flow used in operations of $681,000 for the second quarter of 2018.
• Free cash flow was negative $5.7 million after the company invested $1.6 million in capital expenditures and capitalization of internal-use software during the second quarter of 2019. Free cash flow was negative $1.9 million for the second quarter of 2018.
• Cash and cash equivalents were $21.2 million as of June 30, 2019 compared $28.9 million at March 31, 2019.

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 $83,500 in the second quarter of 2019, excluding starter customers who had average annualized revenue of $4,500 per customer. This compares to $75,000 in the comparable period in 2018.
• Recurring dollar retention rate was 87% in the second quarter of 2019, which was below our historical target of the low to mid-90 percent range.
• Ended the quarter with 3,761 customers, of which 2,350 were premium.
• New and existing customers who expanded their relationships during the first quarter include: HOOQ, The CATO Institute, Vantage Travel, Fortune Media, and Rural Media Group, among others.
• Announced new features and functionality for Brightcove Live, the award-winning live-streaming video solution. Included in this product release is a new Live to Social feature, which enables Brightcove Live events to be streamed to Facebook simultaneously via the Brightcove platform and will soon be available for YouTube. Live to Social enables users to grow and retain viewers by live streaming content to existing audiences in social communities.

Business Outlook

Based on information as of today, July 24, 2019, the Company is issuing the following financial guidance.

Third Quarter 2019:

• Revenue is expected to be in the range of $47.0 million to $47.5 million, including approximately $2.3 million of professional services revenue.
• Non-GAAP income from operations is expected to be in the range of $1.3 million to $1.8 million, which excludes stock-based compensation of approximately $1.8 million, the amortization of acquired intangible assets of approximately $800,000 and merger-related expense of $1.8 million.
• Adjusted EBITDA is expected to be in the range of $2.6 to $3.1 million, which excludes stock-based compensation of approximately $1.8 million, the amortization of acquired intangible assets of approximately $800,000, merger-related expense of $1.8 million, depreciation expense of approximately $1.4 million and other income/expense and the provision for income taxes of approximately $300,000.
• Non-GAAP net income per diluted share is expected to be $0.02 to $0.04, which excludes stock-based compensation of approximately $1.8 million, the amortization of acquired intangible assets of approximately $800,000 and merger-related expense of $1.8 million, and assumes approximately 39.7 million weighted-average shares outstanding.

Full Year 2019:

• Revenue is expected to be in the range of $184.0 million to $186.0 million, including approximately $10.9 million of professional services revenue.
• Non-GAAP income from operations is expected to be in the range of $3.3 million to $4.8 million, which excludes stock-based compensation of approximately $6.4 million, the amortization of acquired intangible assets of approximately $2.9 million and merger-related expense of $8.6 million.
• Adjusted EBITDA is expected to be in the range of $8.7 million to $10.2 million, which excludes stock-based compensation of approximately $6.4 million, the amortization of acquired intangible assets of approximately $2.9 million, merger-related expense of $8.6 million, depreciation expense of approximately $5.4 million and other income/expense and the provision for income taxes of approximately $1.0 million.
• Non-GAAP net income per diluted share is expected to be $0.06 to $0.10, which excludes stock-based compensation of approximately $6.4 million, the amortization of acquired intangible assets of approximately $2.9 million and merger-related expense of $8.6 million, and assumes approximately 38.7 million weighted-average shares outstanding.

Conference Call Information

Brightcove will host a conference call today, July 24, 2019, 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 13692187. 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 managing, delivering, and monetizing video experiences on every screen. A pioneering force in the world of online video since the company’s founding in 2004, Brightcove’s award-winning technology, unparalleled services, extensive partner ecosystem, and proven global scale have helped thousands of companies in over 70 countries achieve better business results with video. 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 2019 and full year 2019, 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; the successful integration of the Ooyala acquisition; 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, merger-related expenses and executive severance and restructuring expense. 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, executive severance and restructuring expense, 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 an acquisition. Executive severance and restructuring expense represents severance paid to the former interim CEO of the company and costs to restructure certain parts of the company with the intent of aligning skills with the company’s strategy and facilitating cost efficiencies and savings. 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, 2019				December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	21,209			$	29,306
Accounts receivable, net of allowance		33,576				23,264
Prepaid expenses and other current assets		14,752				11,936
Total current assets		69,537				64,506
Property and equipment, net		9,976				9,703
Operating lease right-of-use asset		17,171				-
Intangible assets, net		14,387				5,919
Goodwill		55,537				50,776
Other assets		2,946				2,452
Total assets	$	169,554			$	133,356
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	7,061			$	7,712
Accrued expenses		21,807				13,982
Operating lease liability		6,374				-
Deferred revenue		49,842				39,846
Total current liabilities		85,084				61,540
Operating lease liability, net of current portion		11,899				-
Other liabilities		474				1,202
Total liabilities		97,457				62,742
Stockholders' equity:
Common stock		38				37
Additional paid-in capital		264,765				251,122
Treasury stock, at cost		(871	)			(871	)
Accumulated other comprehensive loss		(892	)			(952	)
Accumulated deficit		(190,943	)			(178,722	)
Total stockholders’ equity		72,097				70,614
Total liabilities and stockholders' equity	$	169,554			$	133,356

Brightcove Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
	Three Months Ended June 30,								Six Months Ended June 30,
	2019				2018				2019				2018
Revenue:
Subscription and support revenue	$	44,891			$	37,867			$	83,768			$	75,734
Professional services and other revenue		2,691				3,787				5,650				7,114
Total revenue		47,582				41,654				89,418				82,848
Cost of revenue: (1) (2)
Cost of subscription and support revenue		19,381				13,125				33,551				26,581
Cost of professional services and other revenue		2,228				3,493				4,804				7,248
Total cost of revenue		21,609				16,618				38,355				33,829
Gross profit		25,973				25,036				51,063				49,019
Operating expenses: (1) (2)
Research and development		7,629				7,743				15,023				15,518
Sales and marketing		16,827				15,265				31,083				28,499
General and administrative		5,979				7,045				11,240				12,435
Merger-related		2,620				-				5,552				-
Total operating expenses		33,055				30,053				62,898				56,452
Loss from operations		(7,082	)			(5,017	)			(11,835	)			(7,433	)
Other income (expense), net		19				(481	)			(36	)			(210	)
Net loss before income taxes		(7,063	)			(5,498	)			(11,871	)			(7,643	)
Provision for income taxes		175				154				350				266
Net loss	$	(7,238	)		$	(5,652	)		$	(12,221	)		$	(7,909	)
Net loss per share—basic and diluted	$	(0.19	)		$	(0.16	)		$	(0.33	)		$	(0.22	)
Weighted-average shares—basic and diluted		37,966				35,543				37,323				35,235
(1) Stock-based compensation included in above line items:
Cost of subscription and support revenue	$	95			$	119			$	214			$	233
Cost of professional services and other revenue		68				46				152				86
Research and development		269				303				532				649
Sales and marketing		351				783				809				1,448
General and administrative		576				581				1,076				1,084
(2) Amortization of acquired intangible assets included in the above line items:
Cost of subscription and support revenue	$	403			$	507			$	658			$	1,015
Sales and marketing		478				167				639				333

Brightcove Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
	Six Months Ended June 30,
Operating activities	2019				2018
Net loss	$	(12,221	)		$	(7,909	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		3,934				3,434
Stock-based compensation		2,783				3,500
Provision for reserves on accounts receivable		253				23
Changes in assets and liabilities:
Accounts receivable		(7,688	)			296
Prepaid expenses and other current assets		(1,892	)			(488	)
Other assets		(435	)			(276	)
Accounts payable		58				924
Accrued expenses		7,924				(62	)
Operating leases		(162	)			-
Deferred revenue		3,565				812
Net cash (used in) provided by operating activities		(3,881	)			254
Investing activities
Cash paid for acquisition, net of cash acquired		(3,300	)			-
Purchases of property and equipment, net of returns		(401	)			(958	)
Capitalization of internal-use software costs		(2,372	)			(1,813	)
Net cash used in investing activities		(6,073	)			(2,771	)
Financing activities
Proceeds from exercise of stock options		1,843				4,221
Other financing activities		(117	)			(332	)
Net cash provided by financing activities		1,726				3,889
Effect of exchange rate changes on cash and cash equivalents		131				(51	)
Net (decrease) increase in cash and cash equivalents		(8,097	)			1,321
Cash and cash equivalents at beginning of period		29,306				26,132
Cash and cash equivalents at end of period	$	21,209			$	27,453

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 From Operations, Non-GAAP Net Loss and Non-GAAP Net Loss Per Share
(in thousands, except per share amounts)
			Three Months Ended June 30,								Six Months Ended June 30,
			2019				2018				2019				2018
GROSS PROFIT:
GAAP gross profit			$	25,973			$	25,036			$	51,063			$	49,019
Stock-based compensation expense				163				165				366				319
Amortization of acquired intangible assets				403				507				658				1,015
Executive severance & restructuring				292				-				292				-
Non-GAAP gross profit			$	26,831			$	25,708			$	52,379			$	50,353
LOSS FROM OPERATIONS:
GAAP loss from operations			$	(7,082	)		$	(5,017	)		$	(11,835	)		$	(7,433	)
Stock-based compensation expense				1,359				1,832				2,783				3,500
Amortization of acquired intangible assets				881				674				1,297				1,348
Merger-related				2,620				-				5,552				-
Executive severance & restructuring				752				735				752				735
Non-GAAP loss from operations			$	(1,470	)		$	(1,776	)		$	(1,451	)		$	(1,850	)
NET LOSS:
GAAP net loss			$	(7,238	)		$	(5,652	)		$	(12,221	)		$	(7,909	)
Stock-based compensation expense				1,359				1,832				2,783				3,500
Amortization of acquired intangible assets				881				674				1,297				1,348
Merger-related				2,620				-				5,552				-
Executive severance & restructuring				752				735				752				735
Non-GAAP net loss			$	(1,626	)		$	(2,411	)		$	(1,837	)		$	(2,326	)
GAAP diluted net loss per share			$	(0.19	)		$	(0.16	)		$	(0.33	)		$	(0.22	)
Non-GAAP diluted net loss per share			$	(0.04	)		$	(0.07	)		$	(0.05	)		$	(0.07	)
Shares used in computing GAAP diluted net loss per share				37,966				35,543				37,323				35,235
Shares used in computing Non-GAAP diluted net loss per share				37,966				35,543				37,323				35,235

Brightcove Inc.
Calculation of Adjusted EBITDA
(in thousands)
					Three Months Ended June 30,				Six Months Ended June 30,
					2019		2018		2019		2018
Net loss					$ (7,238)		$ (5,652)		$ (12,221)		$ (7,909)
Other expense (income), net					(19)		481		36		210
Provision for income taxes					175		154		350		266
Depreciation and amortization					2,221		1,790		3,934		3,434
Stock-based compensation expense					1,359		1,832		2,783		3,500
Merger-related					2,620		-		5,552		-
Executive severance & restructuring					752		735		752		735
Adjusted EBITDA					$ (130)		$ (660)		$ 1,186		$ 236

View source version on businesswire.com: https://www.businesswire.com/news/home/20190724005792/en/

Investors:

ICR for Brightcove

Brian Denyeau, 646-277-1251

[email protected]

or

Media:

Brightcove

Meredith Duhaime

[email protected]

Source: Brightcove Inc.

Press Releases

Brightcove (BCOV) Tops Q2 EPS by 2cJuly 24, 2019 4:12 PM