Brightcove (NASDAQ: BCOV) reported Q2 EPS of $0.07, $0.10 better than the analyst estimate of ($0.03). Revenue for the quarter came in at $47.9 million versus the consensus estimate of $44.89 million.

Second Quarter 2020 Financial Highlights:

• Revenue for the second quarter of 2020 was $47.9 million, an increase of 1% compared to $47.6 million for the second quarter of 2019. Subscription and support revenue was $45.6 million, an increase of 2% compared to $44.9 million for the second quarter of 2019.
• Gross profit for the second quarter of 2020 was $28.0 million, representing a gross margin of 58% compared to a gross profit of $26.0 million for the second quarter of 2019. Non-GAAP gross profit for the second quarter of 2020 was $28.6 million, representing a non-GAAP gross margin of 60%, compared to a non-GAAP gross profit of $26.8 million for the second quarter of 2019. Non-GAAP gross profit and non-GAAP gross margin exclude stock-based compensation expense, restructuring and the amortization of acquired intangible assets.
• Loss from operations was $1.2 million for the second quarter of 2020, compared to a loss of $7.1 million for the second quarter of 2019. Non-GAAP operating income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $3.1 million for the second quarter of 2020, compared to non-GAAP operating loss of $1.5 million during the second quarter of 2019.
• Net loss was $1.3 million, or $0.03 per diluted share, for the second quarter of 2020. This compares to a net loss of $7.2 million, or $0.19 per diluted share, for the second quarter of 2019. Non-GAAP net income, which excludes stock-based compensation expense, restructuring, the amortization of acquired intangible assets and merger-related expense, was $2.9 million for the second quarter of 2020, or $0.07 per diluted share, compared to non-GAAP net loss of $1.6 million for the second quarter of 2019, or $0.04 per diluted share.
• Adjusted EBITDA was $4.2 million for the second quarter of 2020, compared to adjusted EBITDA of negative $130,000 for the second quarter of 2019. Adjusted EBITDA excludes stock-based compensation expense, merger-related expense, restructuring, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
• Cash flow provided by operations was $2.9 million for the second quarter for 2020, compared to a use of $4.1 million for the second quarter of 2019.
• Free cash flow was $516,000 after the company invested $2.3 million in capital expenditures and capitalization of internal-use software during the second quarter of 2020. Free cash flow was negative $5.7 million for the second quarter of 2019.
• Cash and cash equivalents were $27.8 million as of June 30, 2020 compared to $32.1 million as of March 31, 2020. During the quarter we repaid $5 million of the $10 million outstanding on our $30 million revolving credit facility.

“Brightcove delivered strong second quarter results that were well ahead of expectations on both the top and bottom line. We had an excellent sales quarter to both new and existing customers, demonstrating that our investments in our products, sales and marketing, and our go-to-market efforts are paying off,” said Jeff Ray, Brightcove’s Chief Executive Officer.

Ray added, “Video has become increasingly strategic to enterprises, who are at the early stages of mass video adoption in their operations. We are seeing a clear shift in the use of video in the enterprise, as organizations are now looking for media grade solutions, where Brightcove is well positioned to deliver. Based on our second quarter performance and visibility into the second half of the year, we are reinstituting full-year financial guidance.”

GUIDANCE:

Brightcove sees Q3 2020 EPS of $0.01-$0.02, versus the consensus of ($0.01). Brightcove sees Q3 2020 revenue of $46-47 million, versus the consensus of $45.11 million.

Brightcove sees FY2020 EPS of $0.08-$0.10, versus the consensus of $0.02. Brightcove sees FY2020 revenue of $186-188 million, versus the consensus of $182.74 million.

Business Outlook

Based on information as of today, July 22, 2020, the Company is issuing the following financial guidance. After reassessing the macroeconomic situation, our performance in the second quarter and our outlook for the second half of the year, we are again providing full year 2020 guidance.

Third Quarter 2020:

• Revenue is expected to be in the range of $46.0 million to $47.0 million, including approximately $2.5 million of professional services revenue.
• Non-GAAP loss from operations is expected to be in the range of $0.5 million to breakeven, which excludes stock-based compensation of approximately $1.9 million, the amortization of acquired intangible assets of approximately $0.8 million and merger-related expenses of approximately $0.1 million.
• Adjusted EBITDA is expected to be in the range of $0.8 million to $1.3 million, which excludes stock-based compensation of approximately $1.9 million, the amortization of acquired intangible assets of approximately $0.8 million, merger-related expenses of approximately $0.1 million, depreciation expense of approximately $1.3 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 $0.01 to $0.02, which excludes stock-based compensation of approximately $1.9 million, the amortization of acquired intangible assets of approximately $0.8 million, merger-related expenses of approximately $0.1 million, and assumes approximately 39.6 million weighted-average shares outstanding.

Full Year 2020:

• Revenue is expected to be in the range of $186.0 million to $188.0 million, including approximately $9.4 million of professional services revenue.
• Non-GAAP income from operations is expected to be in the range of $5.3 million to $6.3 million, which excludes stock-based compensation of approximately $9.0 million, the amortization of acquired intangible assets of approximately $3.4 million, restructuring of approximately $1.3 million and merger-related expenses of approximately $5.8 million.
• Adjusted EBITDA is expected to be in the range of $10.0 million to $11.0 million, which excludes stock-based compensation of approximately $9.0 million, the amortization of acquired intangible assets of approximately $3.4 million, restructuring of approximately $1.3 million, merger-related expenses of approximately $5.8 million, depreciation expense of approximately $5.3 million and other income/expense and the provision for income taxes of approximately $1.5 million.
• Non-GAAP earnings per diluted share is expected to be $0.08 to $0.10, which excludes stock-based compensation of approximately $9.0 million, the amortization of acquired intangible assets of approximately $3.4 million, restructuring of approximately $1.3 million, merger-related expenses of approximately $5.8 million, and assumes approximately 40.2 million weighted-average shares outstanding.

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