BOSTON — July 26, 2017 Brightcove Inc. (Nasdaq: BCOV), the leading provider of cloud services for video, today announced financial results for the second quarter ended June 30, 2017.
“Brightcove reported second quarter financial results that exceeded the high end of our revenue guidance but fell short of our profitability expectations due primarily to additional investments that were made during the second quarter to support one of our strategic customers. We remain on track to return to sustainable adjusted EBITDA profitability in the fourth quarter,” said Andrew Feinberg, acting Chief Executive Officer of Brightcove.
Feinberg added, “During the second quarter, we delivered another strong bookings performance, driven by our expanded product portfolio, and we remain on track to achieve our mid- to high-teens bookings growth target for the year. We are delivering significant value to our customers, which gives us confidence that our continued innovation and increased focus on go-to-market execution will drive improved operational performance and long-term shareholder value.”
Second Quarter 2017 Financial Highlights:
- Revenue for the second quarter of 2017 was $38.8 million, an increase of 5% compared to $37.0 million for the second quarter of 2016. Subscription and support revenue was $35.5 million, compared to $35.1 million for the second quarter of 2016.
- Gross profit for the second quarter of 2017 was $22.2 million, representing a gross margin of 57%, compared to a gross profit of $23.5 million for the second quarter of 2016. Non-GAAP gross profit for the second quarter of 2017 was $22.8 million, representing a non-GAAP gross margin of 59%, compared to a non-GAAP gross profit of $24.1 million for the second 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 $7.9 million for the second quarter of 2017, compared to a loss from operations of $2.2 million for the second quarter of 2016. Non-GAAP loss from operations, which excludes stock-based compensation expense and the amortization of acquired intangible assets, was $5.5 million for the second quarter of 2017, compared to non-GAAP loss from operations of $302,000 during the second quarter of 2016.
- Net loss was $7.7 million, or $0.22 per diluted share, for the second quarter of 2017. This compares to a net loss of $2.4 million, or $0.07 per diluted share, for the second quarter of 2016. Non-GAAP net loss, which excludes stock-based compensation expense and the amortization of acquired intangible assets, was $5.3 million for the second quarter of 2017, or $0.16 per diluted share, compared to non-GAAP net loss of $489,000 for the second quarter of 2016, or $0.01 per diluted share.
- Adjusted EBITDA loss was $4.3 million for the second quarter of 2017, compared to adjusted EBITDA of $885,000 for the second quarter of 2016. Adjusted EBITDA excludes stock-based compensation expense, the amortization of acquired intangible assets, depreciation expense, other income/expense and the provision for income taxes.
- Cash flow used in operations was $119,000 for the second quarter for 2017, compared to cash flow from operations of $2.0 million for the second quarter of 2016.
- Free cash flow was negative $937,000 after the company invested $818,000 in capital expenditures and capitalization of internal-use software during the second quarter of 2017. Free cash flow was $1.0 million for the second quarter of 2016.
- Cash and cash equivalents were $28.4 million as of June 30, 2017 compared to $29.2 million at March 31, 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 Second Quarter and Recent Highlights:
- Average annual subscription revenue per premium customer was $71,000 in the second 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 91% in the second quarter of 2017, which was in-line with our historical target of the low to mid 90% range.
- Ended the quarter with 4,304 customers, of which 2,079 were premium.
- New enterprise customers and enterprise customers who expanded their relationship during the quarter included: Avon, Boston Children’s Hospital, Konica-Minolta, Masterclass, Navy Federal Credit Union, SAP, The Vitamin Shoppe and Under Armour, among others.
- New media customers and media customers who expanded their relationship during the quarter included: The Africa Channel, AsiaNet News Media and Entertainment, Entravision, Football Federation Australia, Foxtel, Madison Square Garden Networks, Major League Soccer, Masterclass, Republic World, RugbyPass, and TV Asahi, among others.
- Introduced several new innovations at its annual PLAY conference that further empower media, marketers and enterprises:
- Brightcove Live is a high-performance, scalable live streaming service that includes server-side ad insertion, cloud DVR, content encryption, on-the-fly clipping and VOD asset creation to deliver seamless monetization and clipping for live events and 24/7 channels.
- Brightcove SSAI (Server-Side Ad Insertion) improves monetization, minimizes the impact of ad blockers and delivers a TV-like experience across every device.
- Dynamic Delivery is Brightcove’s next-generation media delivery platform that offers enhanced reach, flexibility and performance with less storage.
- In-Page Experiences enables users to build customized video layouts that incorporate calls-to-action and dynamic capabilities to deliver different experiences before, during and after a video is played.
- Audience Profiles allows users to analyze the viewing history of individual viewers, providing insight that can be used to guide both short-term actions and long-term program strategies.
- Context Aware Encoding, now in beta, is a new video compression technology that utilizes machine learning to deliver higher quality viewer experiences while also reducing storage and bandwidth costs by up to 50%.
Business Outlook
Based on information as of today, July 26, 2017, the Company is issuing the following financial guidance:
Third Quarter 2017:
- Revenue is expected to be in the range of $37.5 million to $38.5 million, including approximately $2.5 million of professional services revenue.
- Non-GAAP loss from operations is expected to be in the range of $3.2 million to $3.7 million, which excludes stock-based compensation of approximately $1.7 million and the amortization of acquired intangible assets of approximately $700,000.
- Adjusted EBITDA loss is expected to be in the range of $1.9 million to $2.4 million, which excludes stock-based compensation of approximately $1.7 million, the amortization of acquired intangible assets of approximately $700,000, depreciation expense of approximately $1.3 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 $0.10 to $0.11, which excludes stock-based compensation of approximately $1.7 million and the amortization of acquired intangible assets of approximately $700,000, and assumes approximately 34.5 million weighted-average shares outstanding.
Full Year 2017:
- Revenue is expected to be in the range of $152.0 million to $155.0 million. Professional services revenue is expected to be in a range of $10.5 million to $11.0 million.
- Non-GAAP loss from operations is expected to be in the range of $11.8 million to $13.3 million, which excludes stock-based compensation of approximately $7.2 million and the amortization of acquired intangible assets of approximately $2.7 million.
- Adjusted EBITDA loss is expected to be in the range of $7.0 million to $8.5 million, which excludes stock-based compensation of approximately $7.2 million, the amortization of acquired intangible assets of approximately $2.7 million, depreciation expense of approximately $4.8 million and other income/expense and the provision for income taxes of approximately $100,000.
- Non-GAAP net loss per diluted share is expected to be $0.34 to $0.39, which excludes stock-based compensation of approximately $7.2 million and the amortization of acquired intangible assets of approximately $2.7 million, and assumes approximately 34.4 million weighted-average shares outstanding.
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.
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