Brightcove Announces Financial Results for Fourth Quarter and Fiscal Year 2018

BOSTON–(BUSINESS WIRE)–Brightcove
Inc. (Nasdaq: BCOV), the leading provider of cloud services for
video, today announced financial results for the fourth quarter and
fiscal year ended December 31, 2018.


“In the fourth quarter Brightcove continued to execute on the strategic
priorities it has targeted to generate stronger, more consistent revenue
growth and profitability. The Company has accomplished much in 2018 and
is in a far stronger position to achieve its long-term objectives than
when we entered the year,” said Jeff Ray, Brightcove’s chief executive
officer.


Ray added, “Brightcove enters 2019 with a clear market focus, a robust
product development pipeline and a new go-to-market strategy focused on
driving faster sales velocity. Our clear leadership in a dynamic,
fast-growing, multi-billion dollar marketplace provides ample
opportunity for the company to be successful.”


Fourth Quarter 2018 Financial Highlights:


Revenue for the fourth quarter of 2018 was $40.9 million, an
increase of 2% compared to $40.1 million for the fourth quarter of
2017. Subscription and support revenue was $37.8 million, an increase
of 2% compared to $36.9 million for the fourth quarter of 2017.


Gross profit for the fourth quarter of 2018 was $24.4 million,
representing a gross margin of 60% compared to a gross profit of $23.8
million for the fourth quarter of 2017. Non-GAAP gross profit for the
fourth quarter of 2018 was $24.8 million, representing a non-GAAP
gross margin of 61%, compared to a non-GAAP gross profit of $24.5
million for the fourth quarter of 2017. 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 $2.5 million for the fourth quarter of
2018, compared to a loss from operations of $1.3 million for the
fourth quarter of 2017. Non-GAAP operating income, which excludes
stock-based compensation expense, the amortization of acquired
intangible assets and merger-related expense, was $237,000 for the
fourth quarter of 2018, compared to non-GAAP operating income of $1.3
million during the fourth quarter of 2017.


Net loss was $2.6 million, or $0.07 per diluted share, for the
fourth quarter of 2018. This compares to a net loss of $1.4 million,
or $0.04 per diluted share, for the fourth quarter of 2017. Non-GAAP
net income, which excludes stock-based compensation expense, the
amortization of acquired intangible assets and merger-related expense,
was $147,000 for the fourth quarter of 2018, or $0.00 per diluted
share, compared to non-GAAP net income of $1.3 million for the fourth
quarter of 2017, or $0.04 per diluted share.


Adjusted EBITDA was $1.4 million for the fourth quarter of
2018, compared to adjusted EBITDA of $2.3 million for the fourth
quarter of 2017. Adjusted EBITDA excludes stock-based compensation
expense, merger-related expense, the amortization of acquired
intangible assets, depreciation expense, other income/expense and the
provision for income taxes.


Cash flow from operations was $2.8 million for the fourth
quarter for 2018, compared to $5.2 million for the fourth quarter of
2017.


Free cash flow was $2.1 million after the company invested
$682,000 in capital expenditures and capitalization of internal-use
software during the fourth quarter of 2018. Free cash flow was $4.2
million for the fourth quarter of 2017.


Cash and cash equivalents were $29.3 million as of December 31,
2018 compared $26.9 million at September 30, 2018.


Full Year 2018 Financial Highlights:


Revenue for the full year 2018 was $164.8 million, an increase
of 6% compared to $155.9 million for 2017. Subscription and support
revenue for 2018 was $150.9 million, an increase of 5% compared to
$143.2 million for 2017.


Gross profit was $98.2 million for 2018, representing a gross
margin of 60%, compared to $91.3 million for 2017. Non-GAAP gross
profit was $100.6 million for 2018, representing a non-GAAP gross
margin of 61%, compared to $94.0 million for 2017. 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 $13.1 million for 2018, compared to a
loss from operations of $19.7 million for 2017. Non-GAAP loss from
operations, which excludes stock-based compensation expense, the
amortization of acquired intangible assets, executive severance and
merger-related expense, was $2.2 million for 2018, compared to
non-GAAP loss from operations of $9.0 million for 2017.


Net loss was $14.0 million, or $0.39 per diluted share, for
2018. This compares to a net loss of $19.5 million, or $0.57 per
diluted share, for 2017. Non-GAAP net loss, which excludes stock-based
compensation expense, the amortization of acquired intangible assets,
executive severance and merger-related expense, was $3.1 million for
2018, or $0.09 per diluted share, compared to non-GAAP net loss of
$8.8 million for 2017, or $0.26 per diluted share.


Adjusted EBITDA was $2.3 million for 2018, compared to an
adjusted EBITDA loss of $4.5 million for 2017. Adjusted EBITDA
excludes stock-based compensation expense, executive severance,
merger-related expense, the amortization of acquired intangible
assets, depreciation expense, other income/expense and the provision
for income taxes.


Cash flow from operations was $2.6 million for 2018, compared
to cash flow used in operations of $6.4 million for 2017.


Free cash flow was negative $2.0 million after the company
invested $4.5 million in capital expenditures and capitalization of
internal-use software during 2018. Free cash flow was negative $10.6
million for 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 Fourth Quarter and Recent Highlights:


Average annual subscription revenue per premium customer was $75,000
in the fourth quarter of 2018, excluding starter customers who had
average annualized revenue of $4,500 per customer. This compares to
$73,000 in the comparable period in 2017.


Recurring dollar retention rate was 104% in the fourth quarter of
2018, which was well above our historical target of the low to mid-90
percent range.


Ended the quarter with 3,783 customers, of which 2,226 were premium.


New customers and customers who expanded their relationship during the
fourth quarter include: HOOQ, McCormick and Co., Reelz, Adobe, AMC
Entertainment, Forbes Media, MVMNT TV, Ascension Health, Bibel TV,
TaTatu, Rajasthan Patrika Private Limited, DNV GL, among others.


Brightcove was named, for a second consecutive time, a Leader in
Gartner’s Magic Quadrant for Enterprise Video Content Management.
Brightcove was positioned highest on the ability to execute axis
within the entire Magic Quadrant.


Rick Hanson joined Brightcove as Chief Revenue Officer, a new role for
the company. Hanson will oversee the global sales organization
including all customer facing direct sales, channel sales, and
professional services organizations. He joins the company after
previous sales management roles at CA Technologies, HP, RSA and
Skyport Systems.


Business Outlook


Based on information as of today, February 13, 2019, the Company is
issuing the following financial guidance. Please note that this guidance
does not incorporate the recently announced signing of a purchase
agreement for the Ooyala OVP business, which we expect to close in the
first half of 2019.


First Quarter 2019:


Revenue is expected to be in the range of $40.0 million to
$40.5 million, including approximately $2.7 million of professional
services revenue.


Non-GAAP loss from operations is expected to be in the range of
$900,000 to $1.4 million, which excludes stock-based compensation of
approximately $1.6 million and the amortization of acquired intangible
assets of approximately $400,000.


Adjusted EBITDA is expected to be in the range of an Adjusted
EBITDA loss of $200,000 to generating Adjusted EBITDA of $300,000,
which excludes stock-based compensation of approximately $1.6 million,
the amortization of acquired intangible assets of approximately
$400,000, depreciation expense of approximately $1.2 million and other
income/expense and the provision for income taxes of approximately
$300,000.


Non-GAAP net loss per diluted share is expected to be $0.03 to
$0.05, which excludes stock-based compensation of approximately $1.6
million and the amortization of acquired intangible assets of
approximately $400,000, and assumes approximately 36.7 million
weighted-average shares outstanding.


Full Year 2019:


Revenue is expected to be in the range of $168.0 million to
$172.0 million, including approximately $11.1 million of professional
services revenue.


Non-GAAP income from operations is expected to be in the range
of breakeven to $3.0 million, which excludes stock-based compensation
of approximately $6.9 million and the amortization of acquired
intangible assets of approximately $1.6 million.


Adjusted EBITDA is expected to be in the range of $5.2 million
to $8.2 million, which excludes stock-based compensation of
approximately $6.9 million, the amortization of acquired intangible
assets of approximately $1.6 million, depreciation expense of
approximately $5.2 million and other income/expense and the provision
for income taxes of approximately $1.1 million.


Non-GAAP net income/loss per diluted share is expected to be a
loss of $0.03 to income of $0.05, which excludes stock-based
compensation of approximately $6.9 million and the amortization of
acquired intangible assets of approximately $1.6 million, and assumes
approximately 38.6 million weighted-average shares outstanding.


Conference Call Information


Brightcove will host a conference call today, February 13, 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,
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 13686457. A replay of the webcast will also be
available for a limited time at


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 first
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 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; 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, executive severance 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,
executive severance, merger-related expenses, depreciation expense,
other income/expense, including interest expense and interest income,
and the provision for income taxes. Executive severance represents
severance paid to the former interim CEO of the company as well as
former key executives. 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




 


 


 




 




Brightcove Inc.


Condensed Consolidated Balance Sheets


(in thousands)














 














 










December 31, 2018




December 31, 2017


Assets














Current assets:














Cash and cash equivalents








$


29,306






$


26,132




Accounts receivable, net of allowance










23,264








25,236




Prepaid expenses and other current assets








 


11,936


 




 


7,036


 


Total current assets










64,506








58,404




Property and equipment, net










9,703








9,143




Intangible assets, net










5,919








8,236




Goodwill










50,776








50,776




Deferred tax asset










–








87




Other assets








 


2,452


 




 


969


 


Total assets








$


133,356


 




$


127,615


 


Liabilities and stockholders’ equity














Current liabilities:














Accounts payable








$


7,712






$


6,142




Accrued expenses










13,746








13,621




Capital lease liability










236








228




Equipment financing










–








26




Deferred revenue








 


39,846


 




 


39,370


 


Total current liabilities










61,540








59,387




Deferred revenue, net of current portion










146








244




Deferred tax liability










28








–




Other liabilities








 


1,028


 




 


1,228


 


Total liabilities










62,742








60,859
















 


Stockholders’ equity:














Common stock










37








35




Additional paid-in capital










251,122








238,700




Treasury stock, at cost










(871


)






(871


)


Accumulated other comprehensive loss










(952


)






(809


)


Accumulated deficit








 


(178,722


)




 


(170,299


)


Total stockholders’ equity








 


70,614


 




 


66,756


 


Total liabilities and stockholders’ equity








$


133,356


 




$


127,615


 














 




 


 


 




 




 




 




Brightcove Inc.


Condensed Consolidated Statements of Operations


(in thousands, except per share amounts)






















 






















 










Three Months Ended December 31,




Twelve Months Ended December 31,










2018




2017




2018




2017


Revenue:






















Subscription and support revenue








$


37,765






$


36,893






$


150,941






$


143,159




Professional services and other revenue








 


3,099


 




 


3,208


 




 


13,892


 




 


12,754


 


Total revenue










40,864








40,101








164,833








155,913




Cost of revenue: (1) (2)






















Cost of subscription and support revenue










13,588








12,484








53,311








50,664




Cost of professional services and other revenue








 


2,889


 




 


3,834


 




 


13,313


 




 


13,954


 


Total cost of revenue








 


16,477


 




 


16,318


 




 


66,624


 




 


64,618


 


Gross profit








 


24,387


 




 


23,783


 




 


98,209


 




 


91,295


 


Operating expenses: (1) (2)






















Research and development










7,884








7,557








31,716








31,850




Sales and marketing










13,267








12,938








55,775








57,294




General and administrative










5,047








4,619








23,103








21,847




Merger-related








 


716


 




 


–


 




 


716


 




 


–


 


Total operating expenses








 


26,914


 




 


25,114


 




 


111,310


 




 


110,991


 


Loss from operations










(2,527


)






(1,331


)






(13,101


)






(19,696


)


Other income (expense), net








 


101


 




 


24


 




 


(326


)




 


547


 


Net loss before income taxes










(2,426


)






(1,307


)






(13,427


)






(19,149


)


Provision for income taxes








 


191


 




 


65


 




 


601


 




 


370


 


Net loss








$


(2,617


)




$


(1,372


)




$


(14,028


)




$


(19,519


)






















 


Net (loss) income per share—basic and diluted






















Basic








$


(0.07


)




$


(0.04


)




$


(0.39


)




$


(0.57


)


Diluted








 


(0.07


)




 


(0.04


)




 


(0.39


)




 


(0.57


)






















 


Weighted-average shares—basic and diluted






















Basic










36,532








34,692








35,808








34,376




Diluted










36,532








34,692








35,808








34,376
























 


(1) Stock-based compensation included in above line items:














Cost of subscription and support revenue








$


108






$


131






$


481






$


439




Cost of professional services and other revenue










87








62








242








251




Research and development










349








431








1,281








1,563




Sales and marketing










492








797








2,377








2,750




General and administrative










591








528








2,268








2,240
























 






















 


(2) Amortization of acquired intangible assets included in the above
line items:










Cost of subscription and support revenue








$


254






$


508






$


1,651






$


2,031




Research and development










–








–








–








11




Sales and marketing










167








167








666








692








































 




 


 


 




 




Brightcove Inc.


Condensed Consolidated Statements of Cash Flows


(in thousands)














 














 










Twelve Months Ended December 31,


Operating activities








2018




2017


Net loss








$


(14,028


)




$


(19,519


)


Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:














Depreciation and amortization










6,796








7,257




Stock-based compensation










6,649








7,243




Deferred income taxes










118








38




Provision for reserves on accounts receivable










199








203




Changes in assets and liabilities:














Accounts receivable










2,791








(3,811


)


Prepaid expenses and other current assets










294








(1,484


)


Other assets










(536


)






56




Accounts payable










1,197








1,758




Accrued expenses










326








(2,930


)


Deferred revenue








 


(1,256


)




 


4,748


 


Net cash provided by (used in) operating activities








 


2,550


 




 


(6,441


)














 


Investing activities














Purchases of property and equipment, net of returns










(1,538


)






(1,102


)


Capitalization of internal-use software costs








 


(2,993


)




 


(3,010


)


Net cash used in investing activities








 


(4,531


)




 


(4,112


)














 


Financing activities














Proceeds from exercise of stock options










5,757








520




Payments of withholding tax on RSU vesting










(170


)






(268


)


Payments on equipment financing










(26


)






(307


)


Payments under capital lease obligation








 


(311


)




 


(489


)


Net cash provided by (used in) financing activities








 


5,250


 




 


(544


)














 


Effect of exchange rate changes on cash and cash equivalents








 


(95


)




 


416


 














 


Net increase (decrease) in cash and cash equivalents










3,174








(10,681


)


Cash and cash equivalents at beginning of period








 


26,132


 




 


36,813


 


Cash and cash equivalents at end of period








$


29,306


 




$


26,132


 














 




 


 


 




 




 




 




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 Income (Loss) From Operations,
Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Share


(in thousands, except per share amounts)