Business Wire | Jul 22, 2020 04:30PM EDT

Brightcove Announces Financial Results for Second Quarter Fiscal Year 2020

Jul. 22, 2020

BOSTON--(BUSINESS WIRE)--Jul. 22, 2020--Brightcove Inc. (Nasdaq: BCOV), the world's leading video technology platform, today announced financial results for the second quarter ended June 30, 2020.

"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."

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.

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."

Update on Executive Leadership Team

Namita Dhallan has been appointed Brightcove's Chief Product Officer. Namita will drive the next chapter of Brightcove's product innovation, managing the product management, engineering, and operations functions. Namita has previously advised Brightcove's Global Services Team and led the successful Ooyala integration program. Prior to her work with Brightcove, Namita was SVP and Chief Product Officer at Ellucian where she led engineering, product management, and cloud ops/dev ops. She was previously EVP Product Strategy and Engineering at Deltek. Prior to that, Namita held several positions in product management at JDA.

Ray commented, "We are thrilled to welcome Namita to Brightcove. I've partnered closely with Namita in previous roles, and know she will bring world class leadership, deep market insight, and a relentless focus on innovation to Brightcove's product organization."

Other Second Quarter and Recent Highlights:

* Average annual subscription revenue per premium customer was $87,200 in the second quarter of 2020, excluding starter customers who had average annualized revenue of $4,400 per customer. This compares to $83,500 in the comparable period in 2019. * Recurring dollar retention rate was 80% in the second quarter of 2020, versus our historical target of the low to mid-90 percent range. * Ended the quarter with 3,423 customers, of which 2,279 were premium. * New customers and customers who expanded their relationship during the second quarter include: Telstra, Myanmar Media 7, Yomiuri Newspaper, Academy of Television Arts & Sciences, MasterClass, Tastytrade, Arthur J. Gallagher, and The Real Hip-Hop Network. * Experienced continued momentum with our free 50 hours of live streaming offer with over 40 organizations signing up including, iFit, San Francisco Ballet, and Sitecore. * Launched Brightcove Virtual Event Experiences, a solution that allows organizations to deliver high-quality virtual events featuring bold, interactive experiences. Responding to a crucial and timely market need, this solution enables organizations to scale quickly, easily and securely while reaching new audiences around the globe with engaging content. * Published the Q1 Global Video Index, which analyzes hundreds of millions of recent data points from Brightcove's customers globally to provide insights into how viewers are watching video content. Key findings in the report included: a 91% increase in enterprise videos across marketing, sales, and corporate communications due to the pandemic, and 29% of video views during the quarter occurred in the final two weeks following the declaration of a state of emergency. * Kicked off the first-ever PLAY OTT streaming experience focused on video, which is available to viewers globally, at no cost, on mobile devices and the web. Built on Brightcove Beacon, our SaaS OTT application, PLAY TV brings attendees must-watch content from the world of video, including inspiring thought leadership conversations, executive interviews with visionaries in the video industry, customer stories and video best practices. * Recognized by Frost & Sullivan with the 2020 Global Market Leadership Award. Brightcove was noted for having the industry-leading OVP that remains the benchmark for scalability, reliability, flexibility and ease of deployment with more than 99.999% uptime in 2019, which equates to only five minutes of total unscheduled downtime.

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.

Conference Call Information

Brightcove will host a conference call today, July 22, 2020, 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 13706749. A replay of the webcast will also be available for a limited time at http://investor.brightcove.com.

About Brightcove Inc. (NASDAQ: BCOV)

We are the people behind the world's leading video technology platform. With our award-winning technology and services, we help organizations in more than 70 countries meet business challenges and create strategic opportunities by inspiring, entertaining, and engaging their audiences through video.

Since Brightcove was established in 2004, we have consistently pushed boundaries to create a platform for people who are serious about video: one that is robust, scalable, and intuitive. Benefiting from a global infrastructure, unrivalled customer support, an extensive partner ecosystem, and relentless investment in R&D, Brightcove video sets the standard for professional grade video management, distribution, and monetization. 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 2020, 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: the effect of the COVID-19 pandemic, including our business operations, as well as its impact on the general economic and financial market conditions; our ability to retain existing customers and acquire new ones; our history of losses; the timing and 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? keeping up with the rapid technological change required to remain competitive in our industry; 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, restructuring 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, restructuring, 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. 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, 2020 December 31, 2019AssetsCurrent assets:Cash and cash equivalents $ 27,753 $ 22,759

Accounts receivable, net of allowance 26,794 31,181

Prepaid expenses and other current assets 17,326 11,884

Total current assets 71,873 65,824

Property and equipment, net 14,726 12,086

Operating lease right-of-use asset 13,340 16,912

Intangible assets, net 12,090 13,875

Goodwill 60,902 60,902

Other assets 3,524 3,268

Total assets $ 176,455 $ 172,867

Liabilities and stockholders' equityCurrent liabilities:Accounts payable $ 11,283 $ 9,917

Accrued expenses 20,556 20,925

Operating lease liability 5,687 6,174

Deferred revenue 54,647 49,260

Total current liabilities 92,173 86,276

Operating lease liability, net of current 8,618 11,701 portionDebt 5,000 -

Other liabilities 1,100 767

Total liabilities 106,891 98,744

Stockholders' equity:Common stock 39 39

Additional paid-in capital 281,255 276,365

Treasury stock, at cost (871 ) (871 )

Accumulated other comprehensive loss (1,086 ) (785 )

Accumulated deficit (209,773 ) (200,625 )

Total stockholders' equity 69,564 74,123

Total liabilities and stockholders' equity $ 176,455 $ 172,867

Brightcove Inc.Condensed Consolidated Statements of Operations(in thousands, except per share amounts) Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Revenue:Subscription and support $ 45,617 $ 44,891 $ 90,275 $ 83,768 revenueProfessional services and 2,309 2,691 4,304 5,650 other revenueTotal revenue 47,926 47,582 94,579 89,418

Cost of revenue: (1) (2)Cost of subscription and 17,807 19,381 34,555 33,551 support revenueCost of professional 2,092 2,228 3,986 4,804 services and otherrevenueTotal cost of revenue 19,899 21,609 38,541 38,355

Gross profit 28,027 25,973 56,038 51,063

Operating expenses: (1)(2)Research and development 9,131 7,629 17,984 15,023

Sales and marketing 13,383 16,827 27,557 31,083

General and 6,407 5,979 12,939 11,240 administrativeMerger-related 259 2,620 5,768 5,552

Total operating expenses 29,180 33,055 64,248 62,898

Loss from operations (1,153 ) (7,082 ) (8,210 ) (11,835 )

Other (expense) income, (27 ) 19 (495 ) (36 )netNet loss before income (1,180 ) (7,063 ) (8,705 ) (11,871 )taxesProvision for income 115 175 443 350 taxesNet loss $ (1,295 ) $ (7,238 ) $ (9,148 ) $ (12,221 )

Net loss per share-basicand dilutedBasic $ (0.03 ) $ (0.19 ) $ (0.23 ) $ (0.33 )

Diluted (0.03 ) (0.19 ) (0.23 ) (0.33 )

Weighted-averageshares-basic and dilutedBasic 39,292 37,966 39,136 37,323

Diluted 39,292 37,966 39,136 37,323

(1) Stock-basedcompensation included inabove line items:Cost of subscription and $ 123 $ 95 $ 313 $ 214 support revenueCost of professional 90 68 170 152 services and otherrevenueResearch and development 257 269 697 532

Sales and marketing 761 351 1,672 809

General and 867 576 1,864 1,076 administrative (2) Amortization ofacquired intangibleassets included in theabove line items:Cost of subscription and $ 335 $ 403 $ 830 $ 658 support revenueSales and marketing 478 478 955 639

Brightcove Inc.Condensed Consolidated Statements of Cash Flows(in thousands) Six Months Ended June 30,

Operating activities 2020 2019

Net loss $ (9,148 ) $ (12,221 )

Adjustments to reconcile net loss to net cashprovided by operating activities:Depreciation and amortization 4,357 3,934

Stock-based compensation 4,716 2,783

Provision for reserves on accounts receivable 401 253

Changes in assets and liabilities:Accounts receivable 4,055 (7,688 )

Prepaid expenses and other current assets (5,357 ) (1,892 )

Other assets (300 ) (435 )

Accounts payable 2,038 58

Accrued expenses (577 ) 7,924

Operating leases 3 (162 )

Deferred revenue 5,112 3,565

Net cash provided by operating activities 5,300 (3,881 )

Investing activitiesCash paid for acquisition, net of cash acquired - (3,300 )

Purchases of property and equipment, net of returns (1,197 ) (401 )

Capitalization of internal-use software costs (3,839 ) (2,372 )

Net cash used in investing activities (5,036 ) (6,073 )

Financing activitiesProceeds from exercise of stock options 394 1,843

Proceeds from debt 10,000 -

Debt paydown (5,000 ) -

Other financing activities (429 ) (117 )

Net cash provided by financing activities 4,965 1,726

Effect of exchange rate changes on cash and cash (235 ) 131 equivalents Net increase (decrease) in cash and cash equivalents 4,994 (8,097 )

Cash and cash equivalents at beginning of period 22,759 29,306

Cash and cash equivalents at end of period $ 27,753 $ 21,209

Brightcove Inc.Reconciliation of GAAP Gross Profit, GAAP Loss From Operations, GAAP Net Lossand GAAP Net Loss Per Share toNon-GAAP Gross Profit, Non-GAAP Income (loss) From Operations, Non-GAAP NetIncome (Loss) and Non-GAAP Net Income (Loss) Per Share(in thousands, except per share amounts) Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

GROSS PROFIT:GAAP gross profit $ 28,027 $ 25,973 $ 56,038 $ 51,063

Stock-based compensation 213 163 483 366 expenseAmortization of acquired 335 403 830 658 intangible assetsRestructuring 51 292 51 292

Non-GAAP gross profit $ 28,626 $ 26,831 $ 57,402 $ 52,379

LOSS FROM OPERATIONS:GAAP loss from operations $ (1,153 ) $ (7,082 ) $ (8,210 ) $ (11,835 )

Stock-based compensation 2,098 1,359 4,716 2,783 expenseAmortization of acquired 813 881 1,785 1,297 intangible assetsMerger-related 259 2,620 5,768 5,552

Restructuring 1,039 752 1,268 752

Non-GAAP income (loss) $ 3,056 $ (1,470 ) $ 5,327 $ (1,451 )from operationsNET LOSS:GAAP net loss $ (1,295 ) $ (7,238 ) $ (9,148 ) $ (12,221 )

Stock-based compensation 2,098 1,359 4,716 2,783 expenseAmortization of acquired 813 881 1,785 1,297 intangible assetsMerger-related 259 2,620 5,768 5,552

Restructuring 1,039 752 1,268 752

Non-GAAP net income $ 2,914 $ (1,626 ) $ 4,389 $ (1,837 )(loss)GAAP diluted net loss per $ (0.03 ) $ (0.19 ) $ (0.23 ) $ (0.33 )shareNon-GAAP diluted net $ 0.07 $ (0.04 ) $ 0.11 $ (0.05 )income (loss) per share Shares used in computing 39,292 37,966 39,136 37,323 GAAP diluted net loss pershareShares used in computing 39,952 37,966 39,802 37,323 Non-GAAP diluted netincome (loss) per share

Brightcove Inc.Calculation of Adjusted EBITDA(in thousands) Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net loss $ (1,295 ) $ (7,238 ) $ (9,148 ) $ (12,221 )

Other expense, net 27 (19 ) 495 36

Provision for income taxes 115 175 443 350

Depreciation and 1,949 2,221 4,357 3,934 amortizationStock-based compensation 2,098 1,359 4,716 2,783 expenseMerger-related 259 2,620 5,768 5,552

Restructuring 1,039 752 1,268 752

Adjusted EBITDA $ 4,192 $ (130 ) $ 7,899 $ 1,186

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CONTACT: Investors: ICR for Brightcove Brian Denyeau, 646-277-1251 brian.denyeau@icrinc.com or Media: Brightcove Meredith Duhaime mduhaime@brightcove.com